The Columbia Press
August 14, 2020
Senior
7
Financial Focus
Moments
with Adam Miller
with Emma Edwards
Spreading potpourri of words Ensuring you don’t outlive your income
Last week’s column en-
couraged us to encourage
others and, in so doing, we’d
feel encouraged ourselves.
It drew my attention to the
following little lesson that
would have fit in just fine.
It is called a short lesson on
positive thinking.
• If you fail, don’t give up
because FAIL means First
Attempt In Learning.
• End is not the end. In fact,
END means Effort Never
Dies.
• If you get “no” as an an-
swer, remember NO means
Next Opportunity.
While trying to get started
on today’s column, I found
the following chuckle in one
of my many bills. No pun in-
tended, as I know most of us
have many bills.
Anyway, the question was
“What is wrong with a blunt
pencil? Answer, it’s point-
less.
As for the word pointless, it
has been around since 1532
(in case you were wonder-
ing) and is synonymous with
senseless. See, there was a
point in sharing this!
The other day, someone re-
ferred to a mirror as a “look-
ing glass.”
It brought me back about
75 years, when my little sis-
ter and I had a vanity in our
bedroom with a stool in front
of it and drawers angled out
on either side of the oval
mirror at its focal point.
We called it a looking glass,
so when did it evolve into
a mirror? Seems that hap-
pened way back in the 13th
century, but became rather
the “rule of thumb” (or mir-
rors) in 1835.
Think about it.
A looking glass mirrors
our reflection as we gaze
into it. Just as when we lean
over a reflective body of wa-
ter, it mirrors or reflects our
face or the clouds overhead.
Kind of like looking into
Crater Lake. Or, gazing into
Clear Lake in Northern Cal-
ifornia.
So, why share that? I call it
potpourri, which most of us
enjoy from time to time as “a
mixture of dried petals and
leaves from various flowers
and plants that is used to give
a room a pleasant smell.”
I save up fun thoughts
and, once in a while, it gives
us (probably mostly me) a
“pleasant aura or feeling as
we reflect on this potpourri
of various thoughts.”
By the way, I so appreci-
ate those of you sending me
your thoughts and ideas.
I got to thinking how the
masks and face shields we’re
required to wear in stores or
other closed-in areas give us
more time every day.
Think about how they mess
up our hair and hide half our
face. Good and bad I sup-
pose? Hey, are we having too
much fun?
By the way, did you know
you can’t see your ears with-
out a mirror?
The investment world con-
tains various risks. Your
stocks or stock-based mutual
funds could lose value during
periods of market volatility.
The price of your bonds or
bond funds could also de-
cline, if new bonds are is-
sued at higher interest rates.
But have you ever thought
about longevity risk?
Insurance companies and
pension funds view longev-
ity risk as the risk they in-
cur when their assumptions
about life expectancies and
mortality rates are incorrect,
leading to higher payout lev-
els.
But for you, as an individual
investor, longevity risk is less
technical and more emotion-
al: it’s the risk of outliving
your money.
To assess your own longev-
ity risk, make an educated
guess about your life span,
based on your health and
family history.
Consider some statistics:
Women who turned 65 in
April can expect to live, on
average, until age 86.5; for
men, the corresponding fig-
ure is 84, according to the So-
cial Security Administration.
Once you have an estimate
of the number of years ahead,
take steps to reduce your lon-
gevity risk. For starters, try to
build your financial resourc-
es; the greater your level of
assets, the lower the risk of
outliving them. So, during
your working years, keep
contributing to your IRA and
your 401(k) or similar em-
ployer-sponsored retirement
plan.
Then, as you near retire-
ment, do some planning.
Specifically, compare your
essential living expenses
– mortgage/rent, utilities,
food, clothing, etc. – with
the amount of income you’ll
get from guaranteed sourc-
es, such as Social Security or
pensions.
You do have some flexibility
with this guaranteed income
pool. For example, you can
file for Social Security ben-
efits as early as 62, but your
monthly checks will then be
reduced by about 30 percent
from what you’d receive if
you waited until your full re-
tirement age, which is likely
between 66 and 67.
You might also consider
other investments that can
provide a steady income
stream. A financial profes-
sional can help you choose
the income-producing in-
vestments that are appropri-
ate for your needs and that
fit well with the rest of your
portfolio.
If you’ve determined your
guaranteed income will be
sufficient to meet your essen-
tial living expenses, have you
eliminated longevity risk?
Not necessarily – because
“essential” expenses don’t
include unexpected costs, of
which there may be many,
such as home maintenance
and auto repairs.
And, during your retire-
ment years, you’ll likely have
health care costs. If you dip
into your guaranteed income
sources to pay for them, you
increase the risk of outliving
your money.
To avoid this scenario,
establish a separate fund,
possibly containing a year’s
worth of living expenses,
with the money held in cash
or cash equivalents. This
money won’t grow much, if at
all, but it will be there if you
need it.
With careful planning, ad-
equate guaranteed income,
a sufficient emergency fund
and enough other invest-
ments to handle nonessential
costs, you’ll be doing what
you can to reduce your own
longevity risk. And that will
lead to a more enjoyable re-
tirement.
This article was written by
Edward Jones and submit-
ted by Adam Miller, financial
advisor at the Astoria office,
632A W. Marine Drive. To
reach him, call 503-325-7991.
Special columns in The Columbia Press
Every week: Senior Moments with Emma Edwards
Week 1: History in the Making
Week 2: Financial Focus with Adam Miller
Week 3: Off the Shelf by Kelly Knudsen
Final week: Mayor’s Message by Henry Balensifer
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