As I was watching the World Series, similarities between baseball and retirement kept coming to mind. Well, not really, although my mind did start to wander after the second inning. Still, the World Series has a lot to teach us about successful retirement planning. Here are seven lessons the great American pastime can teach us about our golden years:
1. Little by little. The World Series isn't won in a single game. It's not won in four or even seven games, either. The baseball season is a grueling 162 regular season games, followed by post-season play. Winning the Series is the culmination of a long, tough season.
Retirement is the same way. A successful retirement is the result of careful planning and consistent investing over a lifetime. During that time, mistakes will be made. Winning the Series or having a successful retirement doesn't require perfection. But it does require consistency. Remember, retirement is a marathon, not a sprint.
2. Statistics only get us so far. Guess which team had 93 losses in the 2012 season and was dead last in the American League Eastern Division. Hint: They are in the World Series this year. That's right, the Boston Red Sox went from zero to hero in one season. Statistically, such a turn around is not very likely. But as the great Yogi Berra once said, "In theory there is no difference between theory and practice. In practice there is."
We can theorize about retirement all day long. Typically this takes the form of making all kinds of assumptions. How much will the market return? What will inflation be in 30 years? What percentage of our income will we need in retirement? While these are important considerations, what actually happens in the market or our financial lives may vary significantly from theory. Be ready.
3. It takes a team. While some players get more attention than others, winning the Series is a team effort. Planning for retirement takes a team, too, even if you are a do-it-yourself investor. A successful retirement "team" is comprised of some surprising players.
To start, there is the IRS. The tax code gives investors some advantages through various retirement accounts such as 401(k)s, 401(b)s and IRAs. Add to that low-cost mutual fund companies, retirement calculators and free investment tracking tools, and one can assemble an excellent team for very little cost.
4. Some things are out of our control. There are a lot of things in baseball that a team can't control. Umpires will make bad calls. %VIRTUAL-article-sponsoredlinks%The weather is unpredictable. An opposing pitcher will throw the game of a lifetime.
Retirement planning is no different. We can't control the stock market, inflation or the tax code. The key is to make sure we do control those things we can. For example, we can control our investing costs, asset allocation, how much we save and how long we work (in most cases). In short, we should seek to accept the things we cannot change, and do our best to change the things we can.
5. It's simple, but not easy. Baseball is not complicated. Hit, throw and catch about sums it up. Just because something is simple, however, doesn't make it easy. Retirement is simple. Save 15 percent of your income, invest in low-cost index funds and retire at 65. Simple, but as we all know, it's not so easy. As odd as it may sound, planning for retirement takes practice. It's takes practice to consistently spend less than we make, invest the difference and ride out market declines. But as the saying goes, practice makes perfect.
6. Consistency wins. We remember the big plays. The walk-off home runs, ninth inning rallies and no-hitters are stuff legends are made of. But it's the consistent, day-to-day routine plays that build a championship team. Successful retirement planning is also born out of consistency. Consistency in modest spending and regular contributions to retirement accounts are the keys to comfort in our golden years.
7. It ain't over until it's over. As any Yankee's fan will tell you, being up three games to zip doesn't guarantee a win in a 7-game series. I hear from a lot of people in their 40s and 50s who are behind in retirement savings. Some haven't even started. While those late to the game have some hard work ahead, I firmly believe that it's never too late to start investing for retirement. The key is to start today, even if you start investing a small amount of money.
Rob Berger is an attorney and founder of the popular personal finance and investing blog, doughroller.net. He is also the editor of the Dough Roller Weekly Newsletter, a free newsletter covering all aspects of personal finance and investing.
7 Things the World Series Can Teach Us About Retirement
While the only sure things in life are death and taxes, it's worrying about the quality of life that can really be a buzzkill.
Roughly 70 percent of Americans over 65 will need some form long-term care at some point in their lives, according to a study by the U.S. Department of Health and Human Services.
Once you hit 65, you have a 35 percent chance of entering a nursing home. The odds that you'll have to stay there for five years? About 20 percent.
With statistics like these, it's no wonder that the idea of purchasing long-term care insurance keeps popping up. Unfortunately, if you don't purchase coverage when you're in your 50s, it may be too expensive to buy once you're in your late 60s or early 70s. And if you suffer from certain illnesses, the truth is that long-term care insurance coverage may not be available to you.
The first hurdle is getting past the hype so that you can evaluate whether you need coverage -- not everyone does. Here are seven commonly held myths about long-term care.
The fact is, the vast majority of Americans will need some sort of long-term care services as they age, particularly help with Activities of Daily Living (ADLs), including getting in and out of bed, walking, bathing, dressing, and eating.
Even if you're healthy, the aging process unfortunately includes a natural decline in eyesight, hearing, balance and mobility.
It's easy to confuse "long-term care planning" with long-term care insurance, but they're not the same. In fact, making that mistake could literally send you into bankruptcy in your senior years.
Long-term care planning means developing a personal strategy and making decisions now about how you want a range of things to be handled when you or a loved one needs long-term care services down the line.
Insurance is just one of many options people consider for covering the costs of long-term care. If you buy an insurance policy but don't plan appropriately, your care could be compromised. If you develop a plan but never buy the appropriate insurance coverage or execute an advanced care directive, living will, and powers of attorney for health care and financial matters, you could wind up leaving all of your care decisions to others without the means to pay for them.
I lost my father when he was just 49 years old. But his mother lived to be 98 and was fairly vibrant and lived alone until the last year of her life.
There's no telling when you'll need your fully-realized long-term care plan to kick in, so the sooner you plan the better off you'll be.
If you're over 50, the best time to plan is now. It will make you a more informed consumer of long-term care services and will help you stay in control of tough decisions.
Nothing could be farther from the truth. Medicare does not cover the custodial services that help with ADLs. It will cover rehabilitation, home health care and durable medical equipment as long as they're deemed "medically necessary."
Medicaid may pay for your long-term care, but you need to meet strict eligibility requirements, which differ by state and often involve extensive documentation of assets. And don't think you can simply transfer all of your funds to your heirs and then apply. There's a five year "look back" rule that will require you to document where all of your money has gone.
There may be some government help if you're a veteran suffering from a service-related disability. To check your eligibility, go to VA.gov for details.
Have you priced long-term care costs lately? They're pretty darned expensive, and even with long-term care insurance, you'll be responsible for paying for some or all of the care you need.
If there's a shortfall, long-term care insurance benefits could kick in.
Have you tried to be a 24/7 caregiver? It's pretty hard work, even for a devoted family member who loves you. No one person can be there for you every hour of every day and provide all of the care you'll need.
As part of your long-term care strategy, look into caregiving services in your area, including in-home providers, elder daycare centers, elder shuttles, meals on wheels, and other low-cost services offered in your area.
Managing a rotation of 24/7 caregivers is itself nearly a full-time job. You'll want your unpaid family members to spend their energy helping you manage your way through your need for assistance rather than resenting your lack of planning.
Really? What does your home look like?
Stairs, narrow doors, steps in odd places, low bathtubs, showers without handholds are the kinds of architectural obstacles that won't work if you have limited mobility or failing eyesight. And living alone won't help if you slip and fall and no one checks on you regularly.
At some point in time, living in a community or facility may make sense, and as part of your long-term plan, you'll want to consider it sooner rather than later.