Planning for retirement involves addressing various challenges, broadly focusing on ensuring financial stability and preserving one’s desired lifestyle.
Some major concerns include calculating expected Social Security benefits, managing rising health care costs and assessing retirement savings and investment adequacy.
Day-to-day expenses, such as groceries, utility bills, transportation, and leisure activities also weigh heavily on retirees’ budgets.
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Common fears include outliving one’s investments and savings, the impact of inflation on fixed income, and coping with ever-growing medical expenses.
Balancing all these elements while planning for unforeseen circumstances is a crucial part of navigating retirement successfully.
Scott Galloway, the popular author, podcaster and New York University professor, shares a warning on investing for retirement — and also has a bold opinion on how Social Security should be financed.
Related: Scott Galloway sends strong message on Social Security
To address the concern about outliving savings, many choose to invest in financial accounts such as 401(k)s and IRAs (Individual Retirement Accounts), paying close attention to tax considerations to help maintain their financial security throughout retirement.
Health care expenses present another major challenge, as medical needs tend to grow with age. Although Medicare offers partial support, it doesn’t cover everything — retirees often need to budget for additional costs such as prescription medications, long-term care, and specialized medical treatments.
Inflation also poses a serious threat by reducing the purchasing power of fixed incomes over time. For retirees who rely heavily on Social Security benefits, this erosion of value can make it harder to uphold their desired lifestyle as prices for everyday goods and services continue to climb.
Social Security serves as a cornerstone of retirement income but comes with uncertainties. Concerns about its future viability, Cost of Living Adjustments based on inflation, and potential reductions in benefits due to strained trust funds contribute to the financial worries retirees face.
Galloway also offers a strong word of caution on investing for retirement.
A retired couple is seen holding hands and walking on a beach. Podcaster and author Scott Galloway encourages people planning for retirement to invest in index funds and discusses his key idea about how Social Security should be financed.
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Scott Galloway warns Americans on an investing mistake to avoid
In a recent conversation on the Pivot podcast he hosts with prominent business journalist Kara Swisher, Galloway issued a warning and gave some investing advice.
“For the most part, don’t believe you’re smarter than everybody else. I strongly believe that low-cost index funds are the way to go,” Galloway said. “And that is you want to reduce your fees and you want to be totally diversified.”
“You don’t need to find the needle in the haystack. You want to buy the whole haystack,” he added. “I would do something along the lines of 50% of an S&P fund or maybe QQQ (Invesco QQQ Trust) if you want a little bit more exposure to aggressive tech companies.”
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Galloway added more detail to this advice and emphasized his warning about fees.
“There are a lot of great financial advisors on, I hate to say it, Tik Tok and on Instagram reels, where you can type in your exact personality and situation and it’ll look probably something like this,” Galloway said. “Fifty percent in an S&P or S&P-related low-cost index fund to Schwab or Vanguard.”
“You do not want to pay fees,” he continued. “Thirty percent in some sort of index fund that gives you exposure to international or some sort of a credit or debt fund.”
“Again, the key is low fees and then maybe Treasurys so that you have access to some liquidity in case you run into a short-term liquidity crunch, one of you loses your job or something like that.”
Related: Dave Ramsey has blunt words on 401(k)s, Roth IRAs now
Scott Galloway believes Social Security reform is needed
Galloway, who says he earns $16 million annually, contends that wealthy individuals, including himself, should forgo receiving Social Security benefits.
He advocates for the adoption of means-testing to determine eligibility, aiming to ensure that Social Security resources are directed toward those who genuinely depend on it for financial support during retirement.
His view is that serious reform is necessary to cut its cost dramatically.
Related: Veteran fund manager unveils eye-popping S&P 500 forecast
