If you are already retired (or will retire soon), are you ready for your new job in retirement? I’m talking about you being your family’s retirement income manager. You see, if you’re like many Americans nowadays, this will be your profession in retirement whether you like it or not. Why?
More and more of us have savings in 401k or 403b plans through our employers. These types of plans require us to make our own investment choices during our working years. Once we retire, we roll that retirement money into an IRA. Inside the IRA, we (again) are responsible for managing that money, choosing mutual funds, maybe using some of it to buy an annuity, etc. And by the way, we need to make sure that money lasts for 20-30 years (or however long we’ll live after retiring from paid work).
Mutual fund companies hire professional money managers to make investment choices, and insurance companies hire actuaries to create lifetime income products like annuities. Who have you hired to make these choices for you? If you’re like many Americans, you will be your own money manager and actuary in retirement. Do you have the training for that? Do you understand risk and return in the context of asset class returns over time? Do you understand how to manage longevity risk? Financial service firms have employees working 40+ hours a week on these jobs; how much time will you commit to watching your money during your golden years?
So welcome to your new job! By the way, you don’t get paid for your work in salary terms. You bear all the risk; if you mess up, you (and maybe your spouse) will pay with a lower standard of living. On the upside, you will have all the control over managing your money in retirement. Are you ready to work as a retirement income manager?
I’m not saying this can’t be done on your own. To maximize your retirement readiness, you just need to spend the time educating yourself to do this retirement income job right. You won’t much have time to make up for any mistakes. If you don’t want the job and the risks it entails, then hire it out professionally. Retirement income is one of those jobs where you either need to do it right yourself, or pay someone else to worry about it for you. If you choose to be on your own, time to get started with your new hire training!