Going the Distance in Retirement: What You Can (and Can't) Control

As Washington State employees, you have been in the ring of public service for years. Now, as retirement approaches, it's time to focus on our own financial future. Like Rocky Balboa preparing for a championship fight, understanding what you can and can't control is crucial for a winning retirement strategy.

The Retirement Equation: Your Personal Training Regimen
Planning for retirement is like Rocky's intense training montages. Some aspects you can control (like your diet and exercise), while others are out of your hands (like your opponent's strategy). Your mission is to focus on the areas where you can make the most impact.

Factors You Can Control (Your Training Routine)

1. Savings Rate Just as Rocky increased his punch count with each training session, boosting your savings rate can significantly strengthen your retirement readiness. Consider upping your contributions to your 457(b) plan by 1% each year. Even small increases can pack a punch over time.
2. Retirement Age Rocky didn't quit after one fight, and neither should you. Working a bit longer can substantially enhance your financial picture. Could delaying retirement by a year or two be your knockout punch for financial security?
3. Lifestyle Choices Your spending in retirement will greatly impact how long your money lasts. Will your golden years be more modest like Rocky's early days, or luxurious like Apollo Creed's lifestyle? Create a retirement budget to get a clear picture of your needs.
4. Investment Allocation Choosing your investments is like selecting your training exercises. You need a diverse routine to be prepared for anything. Review your investment strategy annually to ensure it aligns with your goals.

Factors You Can't Control (Your Opponent's Moves)

1. Market Returns - The market's short-term ups and downs are as unpredictable as a boxing match. While you can't control it, you can prepare for volatility by diversifying your investments.
2. Inflation - Inflation creeps up like fatigue in a long fight, subtle but significant. Historically, inflation has averaged about 2.9% annually.
3. Longevity - None of us know exactly how long we'll live. But like Rocky, we should train for a long bout. A 65-year-old today has about a 50% chance of living beyond age 85.
4. Health Care Costs - Medical expenses can hit as hard as Ivan Drago. A 65-year-old couple retiring in 2024 can expect to spend an average of $315,000 on healthcare throughout retirement.

Your Secret Weapon: The Washington State Pension
Your state pension is like having Mickey in your corner - a reliable support system for your retirement journey. It provides a stable, predictable income that adjusts for inflation, helping to offset some of the uncontrollable factors we've discussed.

Assembling Your Retirement Plan

1. Start with your baseline: Your pension and Social Security estimates are your starting stats.
2. Bridge any gaps with your personal savings, including your 457(b) plan - these are your extra training sessions.
3. Plan for unexpected rounds: Build in buffers for market downturns, inflation, or a longer-than-anticipated lifespan - always be prepared to go the distance.
4. Regularly reassess: Review your retirement plan annually, like analyzing fight tapes to improve your strategy.

The Power of Professional Advice
Navigating the retirement equation can be as complex as planning for a championship fight. A financial advisor who understands the nuances of the Washington State retirement systems can be your Mickey, helping you optimize your plan and adjust for factors outside your control12.
If you want to chat with me to discuss your unique situation, click this LINK.

Conclusion
While you can't control every aspect of your financial future, focusing on the factors you can influence can make a significant difference. By understanding the retirement equation and taking proactive steps, you can work towards a retirement that's more "Gonna Fly Now" triumph than "Defeat in Moscow."
Remember, the best retirement plan is one that's personalized to your unique situation. Take the time to understand your options, make informed decisions, and seek professional advice when needed. Your future self will thank you for going the distance today.

​Want to learn more about optimizing your Washington State retirement benefits? Check out our free guides:
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Sources
[1] Pfau, W. D. (2023). Safety-First Retirement Planning: An Integrated Approach for a Worry-Free Retirement. Retirement Researcher Media.
[2] Benartzi, S., & Thaler, R. H. (2013). Behavioral Economics and the Retirement Savings Crisis. Science, 339(6124), 1152-1153.
[3] Munnell, A. H., & Sass, S. A. (2009). Working Longer: The Solution to the Retirement Income Challenge. Brookings Institution Press.
[4] Blanchett, D. M. (2014). Exploring the Retirement Consumption Puzzle. Journal of Financial Planning, 27(5), 34-42.
[5] Ameriks, J., & Zeldes, S. P. (2004). How Do Household Portfolio Shares Vary with Age? Working Paper, Columbia University.
[6] Markowitz, H. (1952). Portfolio Selection. The Journal of Finance, 7(1), 77-91.
[7] U.S. Bureau of Labor Statistics. (2024). Consumer Price Index.
[8] Social Security Administration. (2024). Retirement & Survivors Benefits: Life Expectancy Calculator.
[9] Fidelity. (2023). How to plan for rising health care costs.
[10] Washington State Department of Retirement Systems. (2024). Plan Information.
[11] Bodie, Z., Treussard, J., & Willen, P. (2007). The Theory of Life-Cycle Saving and Investing. FRB of Boston Public Policy Discussion Paper No. 07-3.
[12] Blanchett, D., & Kaplan, P. (2013). Alpha, Beta, and Now... Gamma. The Journal of Retirement, 1(2), 29-45.

-Seth Deal