Experts: It’s never too late to plan for retirement

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Columbia financial adviser James Wilson remembers the judge who asked him for a box of tissues before an initial consultation.

Tearfully, the judge admitted to Wilson, who owns Columbia-based financial planning service J.E. Wilson Advisors, that he was embarrassed about not preparing financially for retirement.

Wilson said it was the only time a man cried in his office.

“He knew he was going to tell me his story, and it was awful,” Wilson said. “He couldn’t tell anybody because he was this respected member of the judiciary. He was a mess. And I kept thinking, ‘I’ve got to tell him something that is positive. I’ve got to send him on his way (so) that he could take a step or two or three.’ ”

Wilson said the judge — who ended up not being in as dire financial straits he feared — isn’t alone in his situation.

“It’s a very, very typical thing we see. I wish we didn’t,” he said.

Tim Goldman, Mutual of Omaha Advisors financial adviser and sales director, said people failing to plan for retirement is a problem that spans all industries.

Goldman said that while professionals and executives can be quite intelligent, that doesn’t mean they’re educated in personal financial literacy.

“It doesn’t matter if you make $30,000 or $300,000, the vast majority of people don’t know that kind of stuff,” he said. “There’s a large percentage of people that don’t plan. There’s more who don’t than who do.”

Wilson said people waiting until later in life to think about a financial plan is an increasing trend.

“We’ve been seeing that for a few years as we’re seeing initial prospective clients that are older and older, and it’s very discomforting,” he said.

Wilson said people often think it’s too late to take any financial planning steps. He tries to help those clients, like the judge, focus on what can be done going forward, not what hasn’t been done so far.

“Get started,” Wilson said. “If you can break through this inertia that holds people back from getting started, anything you do will be positive. If you’re not saving, save. If you’re saving not enough, save more. If you’re living in too big of a house, don’t live in too big of a house.”

Even those who’ve taken steps, such establishing insurance policies or retirement plans early in their careers, may find out what they have is not enough to cover them when they eventually retire. People who are used to living a lifestyle that requires $250,000 a year will have to save millions to maintain that same lifestyle in retirement, experts say.

Business owners can face specific challenges when planning for retirement. They may be tempted to put all of their money into that business instead of saving something for retirement, but Goldman said they tend to overestimate the value of the business. He recommends getting a business valuation to determine the real worth of the business, well before considering selling it.

“Yes, you want to sell your business to fund retirement or keep it going and let one of your children take over to keep the income going, but business owners also need to think of diversification,” he said. “Just because you have a business that’s worth money doesn’t mean you shouldn’t set up a retirement account and doesn’t mean you shouldn’t have other investments.”

Wilson also said many business owners, executives and professionals don’t want to surrender control of their money to someone else to manage.

“Executives, entrepreneurs, business owner, all have one thing in common, at least with my experience, and that is control,” he said. “They really can’t let loose, and that works with another force of nature: status quo or inertia. … It keeps people from making changes.”

People don’t necessarily have a financial plan just because they have a retirement account, experts say, and those who anticipate an inheritance windfall may also be in for a surprise. Wilson said people are living longer and may end up spending money that the child expected would be passed down.

Financial planners also advise creating a will so that you, and not a probate judge, will determine how your money is distributed. They also suggest reviewing insurance products and making a business continuation plan along with retirement strategies.

Around 10 years out from retirement, experts advise having a professional analyze your present and future financial situation, keeping in mind that a majority of the average person’s health care costs will be incurred later in life.

“Some of these things can’t be solved,” Wilson said. “All you can do is cut around the edges and say, ‘OK, you’re going to have to sell the big house. You’re going to have to sell the mountain house.’ ”

But both Wilson and Goldman say it’s never too late to start doing something to save for retirement.

“I think the reason why people do nothing is because they get overwhelmed,” Goldman said. “It is a lot, but I think when you sit down with somebody and you talk about all this stuff, all you have to do is identify your priorities and focus on one of them at a time. It doesn’t have to be so overwhelming.”

This article first appeared in the Feb. 17 print edition of the Columbia Regional Business Report.