Cyanide Capsule

I remember when I was young, on television or in the movies there would be the scenario of the secret agent who when caught would take a cyanide capsule to die quickly, thus preventing all opportunity for information to be extracted from the opposing party.

There are many times that I wonder if many people do not have their own cyanide capsule hidden somewhere as it relates to retirement. It sometimes seems as if they plan to live their life however they choose in the manner that they choose as long as they can get away with it, despite the reality that financial matters will catch up with them. Okay, quick hypothetical financial planning exercise. You have a couple who is used to living off of $60,000/year. They will receive $30,000 in benefits from social security and other sources.  They also have $100,000 saved. Not counting the effects of inflation, how long do you think they can live their current lifestyle?

The sad truth is that most fifth graders probably have a stronger grasp of financial planning reality than people who are entering retirement. Most fifth graders would say 3-5 years. I would agree. And yet, I run across couple after couple who though they might be in an extremely similar situation, that they somehow have enough saved combined with other resources to last them the rest of their lives. I guess the operative phrase is “the rest of their lives”. Perhaps they have a cyanide capsule hidden somewhere. Given that the average life expectancy from birth is around 76.2 for men and 81.1 for females, and that the average retirement age is before age 66, there seems to be a disconnect between people’s expectations on how long they can live the lifestyle to which they have grown accustomed and the reality. Perhaps the baby boomers have some secret society and are passing out cyanide capsules to each other saying, “Just remember, if you run out of money… just bite down on this… that way you do not have to worry about anything…” If such is not the case, may I recommend sitting down with an unbiased source and figure out how to come up with a sustainable plan that does not require a cyanide capsule.

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