FINANCIAL STABILITY

Nobody can offer a magic number, a dollar amount at which everything will be okay. One of our great fears, as my friend Richard Ely points out in one of his songs, is that we will run out of money before we die. Since we generally have no idea when we are going to die it is quite difficult to plan a formula that will best align with our financial needs. We can certainly tabulate how much we will have at a certain date if all things remain constant. We can ascertain a prediction of how much money we can spend monthly and still be in the black at any given age. 

We cannot predict with complete accuracy how the stock market will progress, specific levels of inflation over the years, whether financial institutions will still be in place, what our health care costs might turn out to be over the years, and so on. In figuring out projected financial needs however, the biggest question remains, “when will I die?”

Basic life expectancy numbers for the USA are as follows:

Average life expectancy:                    78.8

Women:                                              81.2

Men:                                                   76.4

If 65 years old/expectancy                 19.3 (84.3)

Women:                                              20.5 (85.5)

Men:                                                   17.9 (82.9)

Retirement/investment/insurance companies might use this data to make actuarial predictions for the general public. As a consequence, we have to play the odds somewhat when making personal decisions. I have spoken to a few financial advisors and thankfully they are all reticent to give specific advice; instead they will offer the data, the formulae, and the available information. I can have some idea of how much I own now, and some of the possibilities of how that money might be distributed over time. Many other factors muddy the waters of decision-making. In addition to my own life expectancy I need to take into account the projected longevity of my wife. When to begin Social Security payments is an issue of some contention among advisors. Once again, there are actuarial calculations that will clearly show cost/benefits depending on when we are no longer here to receive payments. 

Social Security is still "In the House!"

Add that to the complicated mix of how and where to invest, rolling over 401K and 403B and retirement packages and where to place them, annuities versus withdrawals from savings, how to distribute payments over time, how much we can afford to spend, what are the necessities that we cannot live without in our expenditures, etc.

Too much data?

Do we try to manage our own finances using perhaps an online banking/investing company? 

Do we allow one person at one company to manage all our funds, and what is the cost of doing that? How do we figure out whom we can trust? Which resources do we use to make these decisions? 

We have a glut of information on the internet, people’s professional opinions, personal histories, political projections, an unending stream of options. And that is if we are lucky enough to have options!

Okay, you get the picture! It’s complicated. I realize the reality that there are millions of people who are not lucky enough or wealthy enough to have these “issues;” these are first world problems. This brings us then to the questions of our perceptions of personal stability and security…