A “Tail” of Two Kitties

March 18, 2014

Cat stories are hard to resist – as evidenced by the media attention last week on the 911 call about an Oregon house cat who attacked a baby, then trapped the family (including the dog) in their bedroom. Mr. Mittens isn’t that ferocious cat, but he does have a “tail” to tell about retirement so take a minute and check out his story, sponsored by the International Foundation of Employee Benefit Plans (IFEBP):

April 2nd is National Employee Benefits Day and this year’s focus for the IFEPB is to increase awareness of the retirement crisis.  If you are approaching retirement, the IFEBP has some tips to Picture Your Retirement:

  • Picture what you want your retirement to look like, whether that’s traveling, a mountain cabin, or a lakeside cottage.  What do you see yourself doing to fill your days – golfing, fishing, gardening?
  • Give your retirement a price tag.  As a general rule of thumb, you’ll need to replace about 80% of your pre-retirement income, but as you get closer to your retirement date, it’s important to project what YOUR needs will be.  Estimate your post-retirement budget, and don’t forget to add the cost of health insurance or Medicare premiums.
  • Do the math and figure out what your income sources will be.  Go to www.ssa.gov and run an estimate of your Social Security benefit. Contact your HR department if you are eligible for a pension, and then see how long your retirement nest egg will last using this calculator.
  • Save for it now by taking full advantage of your 401(k), 403b, and/or 457 plan.  As you get closer to retirement, it may not be enough to just get your employer matching, so take my challenge and max out your contributions based on this year’s IRS limit of $17,500 plus an additional $5,500 catch up if you are age 50+.
  • Enjoy it. Setting your goals now will help ensure a successful retirement for you in the future, whether that’s near or far away.

Back to the cats. Nevin Adams of the Employee Benefit Research Institute (EBRI) has his own “tail” of their approach to food. For example, Nevin points out that you can leave your cat alone at home for a weekend with a supply of food and water sufficient to last for a few days, and odds are when you return, there will still be some left.  But leave your dog alone at home with the same additional allotment of food and water, chances are it won’t last 30 minutes.  And in those circumstances, if you have both a cat and a dog in the same house, odds are the latter will eat the former’s food as well.

So will you have more of a cat or dog mentality when it comes to spending down your retirement nest egg? Experts have long been worried about how quickly individuals would spend through their savings in retirement, whether those rates of spending would too rapidly deplete savings, and if those rates would be sufficient to sustain a reasonable post-retirement lifestyle. I will keep you posted in an upcoming blog post on the findings of EBRI’s Center for Research on Retirement Income (CRI) about whether it’s not just pets that consume more wisely when they have confidence in the future of that next meal.