As is my policy, the one Dad and the rest of my ‘Bully Mentors’ drilled into me, I don’t allow myself a bold statement if I can’t back it up with a specific, empirical, richly detailed explanation. In fact, I say that to callers all the time. “Don’t let me get away with that garbage! Make me back it up ’til you’re satisfied.” Tonight I’m gonna work it a different way.
Here’s the challenge.
Please, start askin’ around. Talk with friends, neighbors, family, folks at work, the innocent bystander behind you in line at Starbucks. Search everywhere ’til you find someone who has firsthand knowledge, no hearsay allowed, of a retiree, or retired couple who’re takin’ home at least $36,000 a year from their 401K. The next one I meet’ll be the first.
Look, I know they’re out there, but my point is that they’re the exceptions proving the rule. The rule? Yeah, the rule. Normal for folks who relied on their employer’s 401K isn’t anywhere near that sort of income. Imagine what it must feel like. You’re almost ready to retire. You call the guy who’s been guiding you for years. He says the ‘safe rate’, the yield at which he judges your principle to be relatively safe from market erosion, will take your half million bucks and give you back about $15-20,000 a year if you’re lucky.
That’s another question you might wanna ask. Find out how many folks have managed to hit the half a million dollar level in their 401Ks.
Given today’s rate for the 10 year Treasury — an eye-popping 1.9% — how you even get that much income becomes a pretty good question. I wonder if the advisor has a pretty good answer.
One of the most disturbing facts I’ve uncovered over the years, is that the average American man with a 401K, has less than $70,000 in it at age 58.
The second part of this challenge is to ask yourself a question.
Forget that financial advisors say to expect a conservative 4% yield on your principle at retirement. Forget that the highest, most conservative Treasury note is less than half that. Most of all, forget that the poor retirees who’re livin’ off that pitiful yield, are doin’ so — what for it — after they pay taxes on it. Oops. Talk about adding insult to injury. First you hit retirement after surviving the roller coaster of stocks ‘n bonds for 20-30 years. You’re proud of what your hard work and stick-to-it-iveness has produced — $500,000. At the current 1.9% 10 year Treasury yield, that’s not even $800 a month — and that piddlin’ amount is before taxes. Can you say, “Welcome to Wal-Mart’?
So, here’s the question.
Given the current balance in your own 401K, what’s a reasonable prediction of your end game retirement principle?
Bonus Question
Combined with your (muffled giggling in background) Social Security check, imagine what quality of retirement you’ll have — OR — IF you’ll be able to retire at all.
If the concept of 401Ks/IRAs had proven to have been a rockin’ success, heck, even a kinda sorta, maybe success, I couldn’t pose this challenge. But we all know it’s a losing proposition for the vast majority of Americans who keep havin’ those pesky birthdays every year. Yet, year in and year out, they contribute. Why?
Let me know about all those happy campers you find who’re livin’ the retirement of their dreams, thanks to their 401Ks.
You can also call me, to let me know your retirement isn’t lookin’ so hot about now. Together, we’ll check out the lay of the land and figure out a plan to vastly improve your end game. Call me at 619 889-7100. Or simply click on the Contact BawldGuy button up top, and start writin’. Have a good one.