Phil Collins, best known as the drummer and lead singer of Genesis after Peter Gabriel left the band in 1975, recently announced that his comeback tour, Not Dead Yet, will take place next summer. This follows the pop icon’s announcement a year ago in a Rolling Stone article that he was no longer retired after officially retiring in 2011.
Phil Collins’ two young sons were his primary motivation for retreating from life on the road, moving to Switzerland full-time about ten years ago, and eventually retiring when they were 10 and 6. Phil’s retirement vision was derailed, however, and he was devastated, when his wife left him in 2008 and took the boys to Miami.
Plan Early and Keep on Planning
Despite the fact that Phil Collins’ most recent marital split was his third and occurred when he was retired, he continues to thrive financially. This is evidenced by Phil’s June, 2015 purchase of Jennifer Lopez’s former Miami home for $33 million and his estimated net worth of $250 million.
Most of us will never accumulate 1% of Phil Collins’ net worth, let alone enjoy his financial freedom. Unlike Phil, the ability to retire comfortably generally requires the creation, implementation, and maintenance of an ongoing retirement income plan. This takes a lot of discipline which many of us don’t have.
To increase the likelihood of success, an initial comprehensive plan should be committed to writing at least 20 years before your targeted retirement date. The plan needs to be constantly tweaked to accommodate personal, financial, and other changes. The changes include, but aren’t limited to, job and career, marriage, children, and health.
Planning doesn’t stop when you reach the finish line, i.e., you retire. Life’s changes don’t pause and neither should your strategizing. Health issues, the timing, scope, and expense of which are difficult to anticipate, become more likely as you progress further into retirement. The possibility of living a long life is a reminder of the importance of the need for ongoing planning.
Plan for Various Possibilities
Although he had two failed marriages in the rear view mirror, Phil Collins experienced a third divorce after he retired. Divorce can be financially challenging when employed, let alone if it occurs in retirement. Unfortunately, with the recent uptick in divorces in later life, it needs to be considered when doing retirement planning.
The older you get, the more you understand the importance of planning for various possibilities, and not just things that you think are likely to happen. If the likely things do occur, they probably won’t do so when you think they will.
A good example is a bear market. Most people don’t plan on a stock market crash coinciding with the beginning of retirement. If this phenomenon, otherwise known as the “sequence of returns,” occurs, it can wreak havoc on your portfolio and your retirement if not properly addressed in your retirement income plan.
You Probably Won’t be Able to Unretire
Phil Collins retired at age 60 with a sizable net worth and royalty income stream before he unretired at 64. After undergoing major back surgery in 2015 to repair dislocated vertebra in his neck that caused nerve damage in his hands, leaving him unable to play the drums, Phil’s popularity hasn’t declined. His performance singing “In the Air Tonight” at the US Open tennis tournament in August was warmly and enthusiastically received.
Whether we retire at age 60, like Phil Collins, or at 70, most of us probably won’t be able to unretire. The further away we get from a daily work routine, the less employable we become. The opportunity for reentry into the workforce is even less likely for individuals who experience health issues that force them into premature retirement.
Although there are no guarantees that a well thought-out and executed retirement income plan will result in a financially successful retirement, studies show that retirement confidence is increased compared to those who don’t follow a disciplined approach. Per the title of a popular Billy Joel song, “Get it right the first time.” You probably won’t be able to unretire like Phil Collins.
Robert Klein, CPA, PFS, CFP®, RICP®, CLTC® is the founder and president of Retirement Income Center in Newport Beach, California. Bob is also the sole proprietor of Robert Klein, CPA. Bob applies his unique background, experience, expertise, and specialization in tax-sensitive retirement income planning strategies to optimize the longevity of his clients’ after-tax retirement income and assets. He does this as an independent financial advisor using customized holistic planning solutions based on each client’s needs and personality.