Many Americans planning for retirement and claiming Social Security benefits for the first time face a difficult puzzle with a number of potential stressors.
Tony Robbins, a personal finance author and motivational speaker, provides a bold perspective on what people should do to prepare for a major financial milestone.
Concerns about health care costs rank high among people planning for retirement.
When a person reaches the age of 65, they qualify for Medicare. However, those costs come with some drawbacks. There are premiums, deductibles, and copayments to consider.
It’s also important to understand that long-term care insurance, which is often the largest expense for retirees, must be purchased.
During their working years, people can invest and save in employer-matched 401(k) plans. Individual Retirement Accounts (IRAs), including Roth IRAs, help to ensure a comfortable retirement.
These financial tools are essential because monthly Social Security checks cannot be relied on to provide the lifestyle that most people expect in retirement.
That is what Robbins means when he advises people to carefully evaluate their finances and make long-term plans.
Tony Robbins has a warning about Social Security planning
Robbins explains that stress about retirement and Social Security should be addressed with serious self-evaluation.
“Time to get your head out of the sand and do some easy number crunching to find out where you are and where you need to be,” according to his website. “Remember: Anticipation is the ultimate power. Losers react, while leaders anticipate.”
Robbins refers readers to a Retirement Confidence Survey (RCS), which clarifies some key details about the stress Americans experience when preparing for retirement.
Among the positive findings is that less than a third of workers are “very confident” about their ability to afford a comfortable retirement.
According to the survey, 58 percent of Americans agree that retirement planning causes them stress.
Tony Robbins discusses Social Security’s limitations
Robbins advises against failing to plan adequately for retirement finances and relying on Social Security benefits to provide enough money for one’s desired lifestyle.
“Social Security was never intended to become a replacement for retirement savings, especially considering the extended length of retirement we can anticipate with longer lifespans,” according to his website.
Furthermore, the RCS report reveals that a sizable proportion of workers report having very little money in investments and savings.
Among RCS workers providing this type of information, 27 percent report that the total value of their savings and investments, excluding the value of their primary home, is less than $25,000. This includes 13 percent who say they have less than $1,000 in savings. Seven percent report totals of $25,000–$49,999, 12 percent $50,000–$99,999, 21 percent $100,000–$249,999, and 33 percent $250,000 or more.
According to Robbins, there are several approaches to calculating how much money is required to retire. In fact, he discusses what he terms the “ultimate retirement dream.”
This is achieving complete financial freedom in retirement, allowing one to do whatever they want without fear of running out of money.
He suggests that one should plan for a 20-year retirement.
Robbins’ simple calculation involves taking a close look at all of one year’s spending and multiplying it by twenty.
Importantly, one should be conservative with these calculations rather than “overly optimistic.”
“If you’re focused on doing what you love, you’ll not only master the science of achievement — and financial success — but also the art of fulfillment,” the author writes.
