To squirrel away enough for a secure future,
you must answer this trio of questions. Only problem:
They are very tough nuts to crack
BY KATHY M. KRISTOF
Wilson, a vice president at a financial planning
firm in Newport Beach, California, always tried to
reassure his clients that things would get better.
But the truth was, he really didn’t know. Nobody
did in those panic-stricken days. Still, he told the
woman that selling everything would be a huge
mistake and he wouldn’t help: If she wanted to be
foolish, she’d have to go it alone.
They argued, and when Wilson hung up, his
secretary dashed into his office. “Oh, my God—
that was horrible,” she said.
“You don’t know the half of it,” he replied. “That
was my mother.”
As Wilson’s mom learned that day, financial
planning is not an exact science. To quote finan-
cial historian Peter Bernstein’s blunt warning to
planners everywhere: “We don’t know what’s go-
ing to happen with anything, ever.”
That might not be what you’ve been led to think
about financial planning, particularly when it
comes to retirement. Log on to your company’s
401(k) home page or poke around any retirement
website (including ours!) and you’ll usually find
a retirement calculator. Some purport to tell you,
to the penny, how much you need to save to live
happily ever after. What’s uncertain about that?
Well, in a word: everything. Your retirement
plan is only as good as your answers to three basic
questions: How long will you live? How will your
investments perform? And how much will you
need to live on for the rest of your life? But you
don’t know the answers to those questions. Nobody
At the peak of the 2008 market meltdown, Mark Wilson got one of those calls every financial planner dreads. On the line was a sobbing 65-year-old retiree, begging him to sell all her investments—stocks,
bonds, everything. She was convinced she was going to lose her retirement
savings and wind up destitute. Wilson had been receiving a lot of calls like this.