The Fourth Quarter

In most professional sports, the clock – the time remaining in the contest – is a factor (baseball being a notable exception – those nine innings are going to be played, regardless of how long it takes).

The clock can be your enemy if you’re trying to hang on to a slender lead – or it can be your friend – if your team needs some extra time to catch up.

Retirement also has a clock – the problem is, we generally can’t see it. Little wonder that time – our retirement clock – is perhaps the biggest uncertainty when it comes to retirement planning. Not just the when it starts, but mostly the “how long” aspect. Surveys suggest that fear of outliving one’s assets is a primary concern about retirement – little wonder since so few have stopped to figure out how much they have, not to mention the uncertainty as to how long it has to last.

I recently read an interesting article by Dr. Joe Coughlin, founder and director of the Massachusetts Institute of Technology AgeLab (and closing keynoter at the 2016 NAPA 401(k) Summit). He notes that if we assume that a person with some or more college education and good income is now likely to live to about 85 or 87 years old, that person’s life can be divided into four periods.

Birth to college graduation is about 7,700 days. College graduation to midlife crisis at about 45 years old is another 8,700 days. Midlife to the retirement age of 65 is another 7,300 days.

Oh – how long for retirement? Well, based on the foregoing assumptions, Coughlin suggests that you can – and for planning purposes I would argue should – add about another 8,000 days from your retirement party to life’s end.

Said another way, for a large, and growing number of individuals, retirement is, in a very real sense, their fourth quarter. One that you “coast” through at your peril, and only if you have built up a large, comfortable, and perhaps unassailable cushion.

For those who tend to see arriving at retirement as a finish line, it may instead be more appropriate to be thinking – and planning – as though we still have another quarter to play.

And the clock… is ticking.

- Nevin E. Adams, JD