Retirees:Are you afraid of dying broke like Thomas Jefferson?

 Thomas Jefferson

Not only did our third president do well throughout his career in American politics (we appreciate the Louisiana Purchase), but he was also born into one of the wealthiest families in the United States. Thomas Jefferson was a thinking man, the author of the Declaration of Independence, a political philosopher, an architect, and the founder of University of Virginia. But money still got the best of him.

What the hell happened? When Jefferson’s father-in-law died, he and his brothers-in-law divided up his estate evenly before any of the debts on it could be settled. And it turned out the debts were more than any of them could handle. Jefferson did his best to sell land to earn money before the American Revolution, but by the time he received the payment the paper money was worthless because of the inflation of the war. The only reason creditors didn’t seize his estate, Monticello, was because of Jefferson’s role in American politics.


What can I learn from this? No matter who you are, money can bite you in the ass. After Jefferson’s death in 1826, Monticello and all his possessions, including 120 slaves (Christ!), were auctioned off. This helped pay for his $107,000 in debt, which by today’s standards equals right around an assload.
 

Of course, everyone knows the biggest fear that retirees have: dying broke.

According to the accounting firm of Ernst & Young and the Center for Retirement Research at Boston College, a household relying on income from Social Security and from $300,000 or less in savings has a 90% of going broke.

How does this happen? According to the research it is a combination of things, but mostly it boils down to unexpected expenses and increasing income on depreciating assets. That is just a fancy way of saying that every time you need money above income, you reduce your assets. And, every time you reduce your assets, you reduce your income because there are fewer assets available to produce income.

Now, here is the big question: is there anything that can be done about this? The answer is YES. It can often be as simple as taking a portion of the existing assets and turning them into lifetime guaranteed income to supplement the Social Security income. When sufficient assets are devoted to producing income, the need to tap into other assets is greatly reduced. We have seen from experience that the odds of going broke can be flipped to a 90% chance of never going broke rather than a 90% chance of outliving assets.

Contact Mintco Financial Team for a full review of your retirement plan.

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