This cartoon really sums up the approach that some take when it comes to retirement. It is shocking to me that there are bright folks who earn a good living and don’t put anything away for retirement. Forget about the rainy day, I am talking about retirement.
Some feel that when the time comes they will just ‘get aggressive’ to achieve a return. The cartoon shown here is a great representation of that detachment from reality and if you have ever had to give folks advice, and let them know how unrealistic their expectations are, you will appreciate this.
I am in the same office building with someone who has an interesting view. He talks about what to do with a spare $1,000 and literally said this the other day “If I could just turn the $1,000 into $4,000 or $5,000 in a few months, I would be happy”. I am serious! That was how out of touch he was with a realistic return. My reply was something along the lines of “Really? Really?! You would be happy with 400% to 500% in 6 months??? Really?! Really?!!”
I had to remind him that he had a poster in his office pitching a product from his company. It was a product that was offering 1.92% annually. He is pitching 1.92% annually and he is shooting for 400% – 500% in 6 months. I can’t print my full response to his statement. It went something like this “Are you f*#*ing kidding me?! Get real! You have got to be joking.”
Don’t forget to set some funds aside from retirement. The level of risk that you have to take in order to achieve a greater return is not something that you do in your later years. With risk comes volatility. You might have 3 years at 25% followed by a year of -20%. That isn’t something that your portfolio can handle headed into retirement. If you are 30 or 40, you have many years to make up the down year. You don’t have it if you are already at the age where you need the funds.
Even if you don’t have much to put away, put something away. $50 per month or $100 per month adds up over time. Check out the following savings calculator to use your own assumptions.