Dollars and Sense: New Year’s Financial Resolutions for a Happy Retirement

Dr. Harold Wong

The secret to a financially happy retirement comes down to smart choices. Key variables are annual savings, rate of return, and amount of Social Security and pension income.

Example: Tom and Judy are both age 55 with $250,000 annual income. They plan on retiring at age 62 and have saved $500,000 of financial assets in their IRAs. All their investments are in Wall Street and average a 5% annual return after all fees. They save $30,000 per year and pay $40,000 of annual income tax. Their friends are envious of their high income and believe they will have no financial problems in retirement.

Scenario 1: At age 62, let’s look at their finances when they retire. Assuming no major stock market crashes, their $500,000 in 401(k)s has grown to $700,000. Their $30,000 of annual savings times seven years is $210,000 and with earnings is now $250,000. Their combined Social Security annual benefits are $45,000, and they have no old-fashioned pension or rental property. If they adhere to the 4% Rule (meaning you can spend only 4% of your total financial assets the year you retire), that would be 4% ($700,000 + $250,000) = $38,000. When you add their $45,000 of Social Security benefits, the total is $83,000. This does not come close to the $190,000 they spend each year. They have a financial crisis in retirement and have to cut spending by 56%.

Scenario 2: An Alternate Retirement Future: They use solar business equipment leasing to save $35,000 of annual taxes, and they don’t retire until age 70. If they average a 10% annual return, this becomes $1,223,240 at age 70. If they choose a safe real estate income strategy or equipment leasing, an 8% annual return would generate a $97,859 annual income. Because they took Social Security at age 70 instead of the previous age 62, it’s now $90,000 annually. If they, at age 55, deposited $400,000 of their IRA funds into a private pension, at age 70 it would generate $69,502 annual income. Now, total annual retirement income is $97,859 + $90,000 + $69,502 = $257,361. They can afford all their bucket list dreams and never have to worry about money in retirement. They have three times the retirement income of Scenario 1.

Conclusion: The choices you make have a dramatic effect on whether you will have a Happy Retirement!

Attend My Free Live Seminars: Tuesday, Jan. 16, or Wednesday, Jan. 17, starting at 6 p.m. at Hyatt Place, 3535 W. Chandler Blvd., Chandler, AZ 85226. The seminars are followed by a free catered meal. The topic is “Beat Inflation by Increasing Income & Reducing Taxes!”

To RSVP for the seminars or to schedule a free consultation, please contact Dr. Harold Wong at 480-706-0177 or [email protected]. His website is

Dr. Wong earned his Ph.D. in Economics at University of California/Berkeley and has appeared on over 400 TV/radio programs.