Hundreds of Long Islanders streamed in for free retirement planning advice at an event designed as a wake-up call to help people prepare financially to afford life after they finish working.
Attendees got advice from Certified Financial Planners, who must follow various fiduciary standards, on May 17 at What The Financial!, sponsored by Schneps Media, publisher of the Long Island Press, and AARP, along with the Financial Planning Association of Long Island at Nassau Community College.
This follows an event in New York City and precedes another in Albany, Sept. 27, as retirement, planning and the lack of it become an even more key financial issue nationwide.
“I wanted to know as much information as I can before I even go to speak to get more information,” said Jo-Anne Williams, a 62-year-old health surveyor for the state of New York who lives in Inwood. “This is the first time I’m getting some believable information that I can see a path for myself.”
Williams said an advisor discussed investing, negotiating better homeowner’s insurance prices, bringing expenses down and possibly setting up a living trust for her house.
“It’s important to build an emergency fund,” said Williams, who added she plans on seeking additional guidance. “I’m also a licensed massage therapist. I may go back into that again.”
John Schoenburg, of Eagle Strategies, New York Life’s investment management company, put things simply.
“Everybody has a different situation. What you’re looking for is who they are, what their main goal is,” Schoenberg said. “Most people in retirement, it’s not about the size of their nest egg and their assets, it’s about never running out of income.”
Dominick Kortkamp, managing partner of and a principal at New York Life’s Manhattan office, noted “Risk” tolerance is the other “r” being considered.
“Retirement horizon is important,” Kortkamp said. “If I have another 20 years to retirement, I can be riskier today than three years from retirement.”
Mark A. Badami, CFP®, CLTC® is president of the Hauppauge-based Long Island FPA chapter, WTF! symposium co-chair and director of retirement planning for Hauppauge- and Syosset-based Center for Wealth Preservation, said 10,000 people turn 65 daily.
“Planning is uncovering a person’s needs, goals, wants and objectives. Planning for expectations,” Badami said. “You have to modify their plan based on their needs, goals and objectives.”
THE GRAYING OF LONG ISLAND
Long Island may be known for its green lawns, but as the U.S. population ages, it is graying, making retirement planning a key regional issue. Nearly 20% of Long Islanders are 65 or older.
In Nassau County, 18.9% of the population was 65 and older in 2022, up from 15.3% in 2010, while in Suffolk County, 18.2% were 65 and older in 2022, up from 13.6% in 2010
“We know that our counties are aging rapidly all across the state. When you look at Nassau and Suffolk, it’s graying quite rapidly,” Bernard Macias, associate state director for AARP, Long Island, said. “Based on the studies that we know, people are frightened for their retirement or lack of planning.”
Gen-Xers who first began turning 50 in 2015, he said, are hitting 60, yet many focused on the present with little planning for future contingencies. “There are a lot of things we don’t save for retirement for, like illness, family care giving responsibilities,” Macias said.
John M. Yerkes, CFP®, CASL, ChFC® at the Center for Wealth Preservation and FPA of LI member, said retiring on Long Island brings challenges.
“Think of the real estate taxes,” Yerkes said. “You have to have saved enough and be prepared to pay a high percentage of income to live here.”
Downsizing by renting can be costly, due to Long Island’s low amount of rentals. “The one thing the U.S. has not done is build enough inventory of homes and rentals,” Yerkes continued. “You sell your house. Where do you go?”
HOW MUCH DO YOU NEED?
A key question is how much people need to retire. Harris said a Northwestern Mutual survey asking how much people think they need to live comfortably after retirement found most thought about $1.3 million.
“That was lower than they said the year before, when they put it at $1.5 million,” said former Money magazine Editor-in-Chief and WTF! Keynote speaker Diane Harris.
Vanguard, one of the biggest providers of 401(K) plans, found the median account balance for a 401(K) for those 50 and older is $88,000.
“No wonder we’re all worried,” Harris added. “I have personally made all the mistakes you can make. I’m here to tell you that you can recover and get on track.”
John Egan, a life solutions consultant at New York Life, said savings should be a lifelong pursuit.
“As soon as you start earning income, you should start saving for retirement,” he said. “People wake up all of a sudden and realize that they didn’t save for retirement and they’re 50.”
Harris said you should pump up savings as much as you can for as long as you can, noting people’s top financial regret tends to be that they didn’t save more.
“You can’t change the past. But you can start saving more today, if you’re working full-time,” Harris said. “The best day to start saving for retirement is yesterday. The next best day is today.”
Badami said knowing the best time to start withdrawing Social Security can help. “Some people don’t know what option to take,” he said, noting financial advisors can assist.
WHAT KEEPS YOU UP AT NIGHT?
While preparing for retirement can be complex, the Financial Planning Association asks people what keeps them up at night. For retirement, the big question remains whether people will have enough money to last through retirement.
Those lead to questions such as when to claim Social Security, whether to get long-term care insurance, how to manage retirement plans, what to do with employee retirement plans and what to do now.
“The importance of an advisor is keeping somebody to stick to the plan,” Yerkes said. “I joke with my clients. I’m a part-time psychologist. I’m going to protect you from you.”
Timing the stock market, he said, can put you at risk, while creating a mix that balances risk and reward can provide the best long-term results.
“I have charts like this,” Yerkes said, noting stocks and bonds can help balance a portfolio. “The stock market is volatile in a year. When you mix the two, it’s more muted.”
WHEN TO RETIRE
While how and how much to save is key, the biggest question may be when, and sometimes whether, and how to retire. Longevity makes that even trickier.
“Women worry a lot about retirement,” said Kimberly Branch, CFP® an FPA of Long Island Board member. “Women are worried about living longer in life and running out of money.”
While 65 may be the traditional retirement age, many delay to continue earning.
“I’m going to work until 70,” Williams said. “I’m a widow. I have to focus on my finances.”
Macias said a lot of Gen Xers “think they’re going to have to work the rest of their life or a longer period of time.”
Harris said it’s possible to slow down, but continue working. “Keep a hand in the work force,” she said, “not your whole body.”
A PENNY SAVED
People often save little to nothing, setting the stage for potential retirement problems or delays.
“Don’t think about some number somebody has given you. Try to build as much as you can for as long as you’re able to save,” Harris said. “Don’t be discouraged and say, ‘I’ll never get there, so what’s the point?’ Be nimble and flexible.”
She discussed the 4% rule regarding how much you can safely withdraw from savings and have enough to last 30 years.
“The 4 % rule is a starting point, not the be-all and end-all,” she said. “How the market is doing when you make withdrawals has a big impact on how long your money will last.”
Harris discussed a “guard rail system” with upper and lower limits on how much to withdraw from savings depending on the market. The upper limit is 5% with stocks rising, and 3 % is the lower limit in a down year, possibly forsaking inflation raises.
She said you also can subtract your age from 110 (conservative) or 120, resulting in a percentage of savings that should be in stock. At age 60, 120 minus 60, means 60% would be in stock with the rest in bonds and cash.
“You won’t overspend when times are good,” Harris added. “But you won’t tap your savings and draw it down too quickly when the market is struggling.”
She looks at this as planning for a long voyage, making sure you have enough fuel in the tank to keep going.
“Think of it like a long road trip. Sometimes you need to speed up. Sometimes you need to slow down,” Harris said. “And sometimes you need to take a detour. But if you stay the course, you’ll get where you need to go.”
EDUCATION EQUATION
Paying for children’s education can have a big impact on parents’ retirement finances. “If you want to provide your child money so they can go to college, it will take a big bite out of your retirement,” Macias said. “Some experts say you shouldn’t do that.”
Harris said 60% of parents provide financial support to adult children, which can reduce retirement funds.
“Think seriously about shutting down the bank of mom and dad,” she said.
Kortkamp said 529 education plans are key ways to help with college, saving to set aside money when needed.
STAYING SAFE FROM SENIOR SCAMS
Others pointed out the importance of protecting funds from scams targeting older adults.
“Senior citizens are definitely affected by identity theft,” said Juliann Giuffre, mortgage consultant and community lending coordinator for Emigrant Mortgage and Emigrant Bank. “We volunteer our time, go to senior citizen centers and talk about identity theft.”
Medicare scams, sometimes using artificial intelligence, are catching on where scammers use data to con people.
“It doesn’t matter if you’re retired or still working,” Giuffre said. “It’s very dangerous, not being up to date with what’s going on.”
People collect information from obituaries and funeral listings and try to obtain funds, sometimes pretending to be grandchildren in the “grandparents scam.”
“They pretend to be a family member and try to get Social Security, bank accounts, to open accounts,” Giuffre said.
INFLATION WORRIES
Harris said it’s important to have an investment mix that helps you stay ahead of inflation, especially for those on fixed incomes.
“You have to invest in a way that money will grow faster than inflation, which means some money in stock, which consistently beats inflation,” she said. “Over the past 100 years, the S&P returned 10.5% a year or 7.5% annualized after inflation.”
She said it’s important to have enough stocks to give growth, but not so much that you lose a lot when the market tanks. Other fundamental issues weigh on many advisors’ minds.
“I’m not particularly concerned about inflation right now,” said Branch. “I know it will come down. I am more concerned about whether Social Security will be solvent.”
THE GOLDEN YEARS
It’s never too late to do the right thing might be the overriding message.
“Even modest amounts of additional savings can make a huge difference,” Harris said. “Wherever you are, you can come up with a simple, practical plan to ensure your money will last a lifetime.”
She said it’s important to “stay flexible when life throws stuff your way” and that “Life always throws stuff our way.” Being “ready” may amount to the final “r” for retirement.
“We need to do more events like these. It allows people to ask experts and talk about it. Retirement planning is like the big elephant in the room,” Macias said, noting AARP does other events as well. “On Long Island we’re very lucky. If you’re seeking advice and information, you will find it here.”
The Financial Planners Association Long Island chapter can provide recommendations and help, while AARP nationwide and locally can provide financial readiness information.
“Treat your health as if it’s a financial asset. I believe that it is,” said Harris, who also advises on staying physically and mentally fit. “People are generally happier than they thought they would be. Money is just a tool to help you get there.”
Harris cited studies that found 43% of retirees say they are having a better time and less stress than they anticipated. A little planning can go a long way to providing happiness later on.
“We want it to be a good thing,” Macias said of retirement. “We all want to look forward to it. You’ve got to prepare and plan.”
