It’s a fact of life that, unlike our parents’ generation who could depend on a monthly pension supplemented by Social Security, most individuals retiring today from the private sector don’t receive a pension. Many of us have 401(k) plans that are typically rolled over into an IRA as a lump sum when we retire. However, generally speaking, the various organizations that employed us during our working years won’t be making monthly electronic deposits into our checking accounts when we retire.
Unless your lifestyle allows you to survive solely on Social Security or a comparable monthly benefit if you don’t qualify for Social Security, it’s necessary for you to create your own monthly pension. Similar to private sector pension plans that were popular years ago, your monthly pension needs to last for an uncertain period of time – your lifetime as well as your spouse’s lifetime if you’re married.
Many of you are probably asking yourself, “Why do I need to create a monthly pension when I’ve been accumulating all of these assets for all of these years that I plan on using to fund my retirement?” That’s the million dollar question and is precisely the reason why I created this blog. The answer to this question requires a paradigm shift, or a sudden and radical change in one’s accepted thought pattern or behavior. You know when this occurs when you have an “Aha!” experience whereby you suddenly see things in a totally new and different way.
The term paradigm shift was introduced by Thomas Kuhn in his 1962 landmark book, The Structure of Scientific Revolutions. Kuhn demonstrated how almost every significant scientific breakthrough is initially a break with accepted, and typically, long-standing, ways of thinking. While Kuhn provided many historical scientific examples to explain this phenomenon, Stephen Covey provided us with one of the best and most powerful non-scientific examples of a paradigm shift in his #1 national bestseller, The 7 Habits of Highly Effective People.
Covey was traveling on a New York subway one Sunday morning where people were sitting quietly. Suddenly, a man and his children entered the subway. The man sat next to Covey, closing his eyes. His children began running wild, yelling back and forth, throwing things, and even grabbing people’s papers. While everyone on the subway, including Covey, felt irritated, the children’s father was oblivious to the situation. Finally, Covey asked the father if he could control his children since they were disturbing a lot of people. The father replied, “We just came from the hospital where their mother died about an hour ago. I don’t know what to think, and I guess they don’t know how to handle it either.”
Needless to say, Stephen Covey suddenly saw everything differently. This caused him to think differently, feel differently, and behave differently. His heart was filled with the man’s pain. Everything changed in an instant.
So how exactly does the paradigm shift phenomenon apply to retirement planning? Be sure to mark your calendar for Monday, August 31st at the crack of dawn when “The Retirement Planning Paradigm Shift – Part 2” AKA “Return of the Blog” descends from the blogosphere to a local blog site near you. If you haven’t yet subscribed to Retirement Income VisionsTM, please do so now since you won’t want to miss it! And remember, don’t be afraid to click on “Subscribe” at the top of this page.