Americans worry about affording retirement, but that doesn't usually translate into hard-core financial planning. Then there's David Littell, the 61-year-old director of the retirement income planning program at the American College of Financial Services, a nonprofit that educates financial advisors. If anyone ought to have a well- thought-out plan, it's this guy.
So we asked him what's in it.
It's a little intense—this is one well-prepared pre-retiree, and one who knows his insurance products, since the College's focus has historically been on educating insurance agents. While the challenge of ensuring he won't outlive his money isn't unique, his attitude may be. "I find this fun," he said. A sign of how into this stuff he is? Before a follow-up call, he emailed a three-page, 1,500-word, bullet-pointed outline of his thinking.
Here's how a retirement income geek puts theory into practice.
The Situation
Matching increasing longevity with increased savings is among the biggest challenges facing retirement savers. It's not an abstract one for Littell, whose father retired at 75 and is 103. His father has managed his own finances well and, when he started spending down assets at 84, bought an annuity with some of his money. "It let him sleep better at night," Littell said.
Littell's doing well on the savings side. He earns a salary in the low six figures and has saved throughout his career, putting 10 percent, on average, into a defined contribution plan.
He said he's an example of how the defined contribution environment—that's 401(k) territory, an environment without defined benefit plans, the traditional pension—can work "as long as you contribute, roll the money into an IRA when you change jobs, and invest for the long haul." A $20,000 rollover made years ago has more than quadrupled and is his biggest retirement asset. Most of the money is in a variety of low-cost stock mutual funds. He also has a small defined benefit plan, which was frozen.
Littell and his 70-year-old husband, Edward Selekman, have been together for 30 years; they married about a year ago. They own their home and have long-term care policies. Edward, a psychotherapist who worked out of their suburban Philadelphia home, just retired. They have no children as a couple; Edward has three children from a prior marriage. If Edward hadn't retired, Littell said, he probably wouldn't be thinking about retirement himself. Now he's thinking he'll retire in about three years, rather than five or 10.
The Vision
After training financial reps on the importance of getting clients to really plan what their retirement will look like, Littell is realizing it's not so easy. "This idea that somehow you have this clear picture of what you want as you approach retirement is kind of a fantasy," he said. "Life's more fluid than that."
For example, the couple might want to move somewhere warmer, but haven't decided where yet. You have to know the details of housing costs to figure out how much you need to retire comfortably. There's a "crazy expensive" continuing care retirement community in California they're interested in, but if they move there, it means much higher expenses than for other options.
Littell's main retirement objective is one many people share: having the financial freedom to choose how he spends his time. He expects to work in retirement, educating consumers, but work won't be the highest priority, if his planning works. And he doesn't want to worry about that work being compensated.
Littell, who was a fencer in the 1988 Olympics in Seoul, would also like to coach fencing; he coached the men's and women's varsity teams at Haverford College from 2000 to 2006.