Preparing for retirement
There's still time to save up

By Stacee Sledge, for The Bellingham Herald

For most, the thought of retirement is liberating — a much-anticipated stepping away from the daily grind, into a welcomed world of payback for years spent toiling for a paycheck.

But a rewarding retirement can only happen if you prepare yourself — both fiscally and emotionally — before you take the plunge.

Obviously, you must first line up the finances to fund your fun.

Ideally, this isn’t something you should wait to do until you reach your forties or fifties. Chris Hemingson, Assistant Branch Manager and Assistant Vice President Investments for Piper Jaffray in Lynden put it plainly: “The earlier you start, the better off you are.”

It sounds simple. And, if you spend just a few minutes punching numbers into one of dozens of retirement calculators available online, you’re sure to be swayed by the dramatic long-term impact of compound interest.

Using a simple retirement calculator found at to play with the numbers shows that if you save $3,000 a year beginning at age 25 with an annual return rate of 7 percent, you will accrue $ 598,905.34 by age 65. If all numbers remain the same, but you wait until age 40 to begin saving, you will have only $189,747.11. That hefty difference should be enough to push you to put a plan in place.

Your first step? Find a financial advisor. Hemingson pointed out just how risk-free it is to set up that initial meeting: “I don’t know of any investment advisors in Whatcom County that charge by an hourly basis — unlike a lawyer or CPA, who’s going to send you a bill.”

You might think Hemingson and his colleagues are flooded with people coming in for free advice, but that’s not the case. “I think there’s a general fear of ‘I don’t want to seem stupid about money,’” he said. “It’s not been taught in school; it’s something that’s passed down from generation to generation. And, quite frankly, parents are usually the worst source for this kind of information, because the rules have changed over time.”

Realize that a financial advisor is there to help you — not judge. So, no matter how long you have (or haven’t) been socking money away, sit down with a professional and find out if you’re financially ready to retire or on the right path to do so when you reach retirement age.

Obviously not everyone will be on the financial ball at the age of 25. But as you grow older, more things require more of your money: your first new car, your first home, kids, and their college education. Until you reach your late forties or early fifties, many of your available resources that can put away for retirement get soaked up by other things.

Hemingson says that as people start entering their power earning years — typically age 45 and after — they start really socking it away in investments. And the longer they’ve waited the more aggressive they tend to be. “They put more and more money towards the stock market, seeking out the highest return. And that’s what caught most of the retirees in the last five years,” Hemingson said. “By being too aggressive, they’ve suffered too much of a market loss.”

Hemingson stresses the importance of a good asset allocation model, investing a balanced amount in stocks, bonds and other investments, such as real estate. “All markets run in cycles,” he said. “Nothing goes straight up. The secret to investing is buying when things are cheap and selling them when they have reached a higher value. Yet, when many people invest, they use a different part of their brains; it’s more of an emotional rather than a logical decision.”

“The other really insidious thing about retirement,” Hemingson continued, “is that everyone is living longer. Retirement planning is very easy if you know exactly when you’re going to die. I had a client tell me that a perfect retirement is where your last check is to the mortician, and it bounces.”

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