The Over-55 Graduation Exercises

Teresa Bear | Jul 15, 2013, 6 a.m.


Teresa Bear

Question: I’m retiring soon—Yay! How do I replace my paycheck?

Answer: Commencement. As I write this article on Memorial Day weekend, I am pensive. Three days ago, I watched my one and only son walk across a stage to accept his high school diploma. No doubt many of my readers have done the same and experienced some of the same emotions that I did—pride at the man that he has become—mixed with anxiety for the path that lies ahead and sadness that this person who has been a huge part of my life will soon be leaving me behind to find his own way, start his own career and someday—maybe—his own family.

Commencement, according to the dictionary, has meaning beyond receiving a diploma. Com•mence•ment (kuh-mens-muhnt) an act of commencing; beginning.

As I think about this weekend’s activities, it seems as if retirement is a bit like graduation.

First of all, it is an end—and a beginning. It’s a little frightening because there are seemingly endless choices. A new high school graduate may look for a job or pursue an education, and there are hundreds of college majors that weren’t even around when we were graduating from high school. A retiree also has choices to make. “What will I do with that 40-plus hours a week that used to be devoted to work?” “Where will I live?” “Will I travel?” “Will I now be able to spend time with my grandchildren?”

Of course, financing is also a challenge. In the past, certified financial planners have often used a three-legged stool for an analogy for the three sources of retirement income—pensions, Social Security and personal savings. I was contemplating how college funding is remarkably similar.

Some retirees are lucky enough to have pensions to reward them for past hard work. Students are likewise rewarded with scholarships for hard work. My son worked hard to earn two scholarships to help pay for college next year.

For students, the second leg of their funding is from the government. Those grants and loans will help contribute to his education—and someday turn him into an upright tax-paying citizen of the United States. Similarly, retirees are receiving the Social Security benefits that they have worked a lifetime to earn.

The final leg of financing both retirement and college is that wildcard—personal savings. After performing an analysis, the student aide office came up with a number entitled “expected family contribution,” which means the money that we need to fund James’ tuition out of our pockets. Similarly, retirees have that same issue—funding retirement income from their savings and investments.

The good news about college is that (hopefully) we only need to fund James’ education for four years (right now having only one child seems to have been a good decision). However, according to statistics, for a 65-year-old married couple, one spouse will be living 27 years in retirement! Assuming your annual income needs in retirement are the same as that “expected family contribution,” that would be equivalent to putting seven children through college!

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