Tuesday, July 17 , 2018, 6:35 pm | Fair 71º

Your Health
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Karen Telleen-Lawton: Fires and Finances

When I read wildfire stories, I can’t help but be moved by the residents’ dire situations as they attempt to think through the panic.

Shock overcomes even the most prepared residents. Los Angeles Times’ writers interviewed Erskine Fire residents in June, detailing a couple’s harrowing escape.

“Everything was flying into your eyes,” said a resident named Magan Weid. “I didn’t have time to get glasses. I literally just grabbed a bag with miscellaneous crap. I didn’t have time to get anything together.”

For most of us, emergency preparation is one of those long-term goals that never quite make it to the front of our consciousness — until there’s an emergency. We justify it by thinking emergencies are low probability events.

As a financial planner, I’ve come to see retirement planning as a high-probability emergency for many Americans.

I wrote a couple of months ago about the Federal Reserve survey reporting that 46 percent of adults don’t have enough money saved to cover a $400 emergency without selling assets.

That same survey showed that almost a quarter of 45- to 59-year-olds say they have no retirement savings or pension. That’s dire.

Teresa Ghilarducci, an expert in retirement planning and economics professor at The New School in New York, sees that this situation is finally being discussed at higher levels.

“There’s more activity around retirement savings than there has been in two years,” she points out. Politicians are even wading into the rough waters of Social Security reform.

“The reason we’re talking about expanding Social Security is precisely because the retirement crisis is bigger than people thought and more immediate than people thought,” she says.

The Social Security system was only ever designed as a backstop; not as a complete retirement system. Current retirees count on their Social Security check to cover about 39 percent of their income, so individual savings is paramount.

Ghilarducci would like to see guaranteed retirement accounts funded by mandatory paycheck deductions. The funds would earn a “secure, modest, guaranteed rate of return” paid out in a lifetime annuity.

This sort of system would force younger Boomers and the following cohorts to improve their precarious finances and prepare for the increased longevity we all hope to enjoy.

It’s an unfortunate fact that most of us seem to need a shock to make a plan and stick to it.

Returning to the fire analogy, the Tea Fire was a wake-up call for us that later likely saved our home in the Jesusita Fire.

I kept an emergency pack list, but it was incomplete and out-of-date when I evacuated for the Tea.

I left without either a change of underwear or a cell phone charger. Fortunately for us, the fire fizzled out two houses away. Afterwards I updated our emergency pack list and worked with a neighbor to pay for major landscape clearing.

Five months later, homes directly above and below us burned to the ground in Jesusita Fire. Firefighters credited our brush clearance with giving them the time and space they needed to save ours and our neighbor’s homes.

Utilities were damaged, so we were out of our home for three weeks. But this time we were prepared with cell phones, chargers and clean underwear.

What can you do today to avoid having to wait for a financial shock to get on your best course for an anxiety-free retirement?

— Karen Telleen-Lawton’s column is a mélange of observations spanning sustainability from the environment to finance, economics and justice issues. She is a fee-only financial advisor (www.DecisivePath.com) and a freelance writer (www.CanyonVoices.com). Click here to read previous columns. The opinions expressed are her own.

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