Planning for Death Like Planning for Doomsday

Does it seem like the craziness surrounding December 2012 is starting to escalate? I’m worried about some of the more irrational things people will start to do as the date gets closer.

Then I moved on to worrying about something else…

The Date

Planning for a date, any date, at which point things are supposed to “end” is a tricky business. The first and only reason is—what happens if it doesn’t end?

Sure, we can always “live like we’re dying,” but at the same time, we can never “live like we’re dying.” What happens if we don’t?

Retirement planning…like throwing darts

I started thinking about planning for retirement, whatever the heck that is (or will be in 40 years).

I have nothing against retirement planning per se, but with almost any retirement plan comes the question of where to stop…the expected life span. There’s no sugar coating planning for death.

So what happens if you outlive your plan?

A bit of silence and tension. If you’re planning for your retirement capital to run out when you die, and you don’t die when you planned…then you’re out of capital.

Oops.

A few possible solutions

I don’t want to get all doom and gloom on you today. Leave that to the 2012-ers. So I offer you a few solid solutions to avoid the doomsday scenario:

  • Don’t plan for your capital to run out. Instead, live only off interest if possible, and leave money to your heirs or a charity. Make your retirement funds sustainable/self-renewing.
  • Change other assumptions. Reduce your expected income draw. Increase lifetime contributions. Play with the numbers until you get what you think you’ll need.
  • Don’t retire. Build passive income that requires little input on your part, but can provide supplemental income.

At what age do you plan to “die?” What happens if the plan doesn’t go as…planned?

Photo by alancleaver_2000

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