Yesterday, Bloomberg.com published a story about Tom Palome, a former vice president of marketing for Oral-B. He once had a low six-figure income but now, at the age of 77, he works two part-time jobs during his retirement.
While the money he receives from social security and his pension (a total of $1,800 a month) is enough to get by, the money he makes at his jobs allows him to save during his retirement, enjoy a few recreational activities, and make an occasional trip to visit family.
Palome was far from irresponsible with his money; over the course of his career, he paid for his children’s college tuition and supported his elderly parents. However, he only saved $90,000 for retirement. Then, with most of this money invested in stocks, he saw his savings drop to $40,000 when the financial crisis hit five years ago.
As you can see, making a lot of money isn’t enough to prepare you for retirement: you need to have a plan and start saving. Palome didn’t save enough — “I never thought I’d live this long,” he says — but is fortunate to be healthy enough to work at 77. But not everyone will be able to work at that age; even if they are, there’s no guarantee they’ll be able to find a job.
So what can we learn from Tom Palome?
- Social Security isn’t enough to live on during retirement — especially if you want to maintain your pre-retirement lifestyle.
- Palome didn’t know how long he would live and neither do you. Make a retirement plan and include contingencies.
- Save early, save often.
- You need to invest in stocks to build up your savings for retirement. But when you’re closer to retirement, invest in less stocks to lower your risk. Palome could have recovered from losing more than half his investments when he was 30 or 40 — but not when he was 70.
Do you have a retirement plan? Have you started saving yet? If you don’t, it doesn’t matter how old you are or how much money you make: start planning and saving for retirement today.
This article highlights only a few points in Palome’s retirement experience. For the entire story, click the link below.