Many retirees express regret for not having started their savings journey earlier. Ric Edelman, a retirement expert and founder of The Digital Assets Council of Financial Professionals, joined TheStreet to offer advice for those who find themselves needing to catch up on their retirement savings.
CONWAY GITTENS: What is the most common financial regret you see among retirees currently?
RIC EDELMAN: The most prevalent financial regret is not starting to save sooner. Many wish they had begun saving in their twenties, but few actually did.
CONWAY GITTENS: What advice would you offer to those approaching retirement and feeling unprepared?
RIC EDELMAN: This is indeed a dilemma since we cannot turn back time. If you find yourself wishing you had started saving earlier and realize you haven’t accumulated enough savings, you’re left with a couple of tough choices. First, you may need to work for a longer period. Second, you may need to allocate more money to your savings, even if it feels financially straining. Unfortunately, there aren’t many alternatives. Reducing expenses is an option, but not everyone is willing to make significant lifestyle changes such as selling their house and downsizing. Another, less popular option, which people rarely discuss, is to shorten your life expectancy. Ultimately, the best course is to save more, work longer, and ensure you are investing for higher returns. Simply placing extra savings in a bank account yielding 3% will not achieve your goals. Remaining invested in the financial markets is crucial for accumulating the necessary funds for retirement.
CONWAY GITTENS: You mentioned four pieces of advice. Considering cost of living adjustments, how should people prepare for retirement?
RIC EDELMAN: It is important to acknowledge that inflation is an unavoidable aspect of life. The recent years have seen significant inflation, and the high prices are expected to persist for some time. Therefore, it’s essential that our money earns a return that surpasses the cost of living. When comparing various asset classes like stocks, bonds, real estate, gold, oil, crypto, along with bank accounts, money market funds, and treasuries, we need to identify those with the greatest potential to outpace inflation. Additionally, the impact of taxes cannot be ignored; taxes are likely to rise in the coming years. To achieve a real rate of return, overcoming the twin challenges of inflation and taxation is critical. Although this makes financial planning more challenging, it remains essential.
