Do You Have a Financial Plan?

HELP! I CAN’T REMEMBER MY PASSWORDS

By Neil Offen

When should you begin saving for retirement? How much money should you save? How much is enough, particularly if you’ve always been a profligate spendthrift and now have that title on your LinkedIn profile and officially embossed on your business card?

These are questions many people ask even before they approach their golden years, particularly if they haven’t managed to buy any gold, which is at an all-time high, and instead spend all their savings on ice cream sandwiches, which are pretty much still affordable.

But where to start?

As a Certified Financial Illiterate (CFI), I can answer some of the most common questions about retirement planning.

When should I start saving for retirement?
In general, start saving for retirement as early as possible. Set the alarm for something like 4 a.m. and check your bank account. If you can find it in the dark without bumping into the corner of the bed, then you can start saving.

And do the math. If you had started saving on a Tuesday back when you were, say, 21, by now you would really regret not having taken that year off to go backpacking across Europe when you were 22. But even if you’ve waited, it’s never too late to start, unless it’s a weekend and everything is closed.

How much should I save?
Hypothetically, if you were to save $25 a month each month for the next 62 years, including each and every February, would you remember where you had put all the money? Would you be able to bend down and look under the dining room table in case it was there? Would you then be able to bend back up?

There is, fortunately, a mathematical formula to figuring out how much you should save from each paycheck. It involves a complex algorithm. Unfortunately, the algorithm is too complex to understand.

What if I’m near retirement and running out of time to save?
You can always set your clock ahead 15 minutes and then be happily surprised it’s not as late as you thought it was. Or you can wait for daylight saving time.

What should I do with the money I have saved?
You could invest it in the stock market, but just remember that past performance is no guarantee of future performance unless the past performance is really bad. And be sure, of course, to diversify your investments, putting a certain percentage of your savings under the bed while another percentage goes in the cookie jar on top of the fridge.

Remember, you don’t want to outlive your money, so find money that is young and healthy, with no major disorders, and make sure your dollar bills can do pushups and can hold a plank for more than a minute.

If the market plummets, should I get out of stocks and go into bonds?
It would probably be better to go into plummets.

Will Social Security be around for me when I retire?
It may be around, but you might have to search for it. It could be lost in that closet in the kids’ old bedroom, right behind the recorder your daughter got in sixth grade and never played again.

Finally, whom should I trust for retirement financial advice?
Probably not me.

Carrboro resident Neil Offen has written humor pieces for a number of different publications, in a number of different countries. His column will appear twice monthly in The Local Reporter.