CAMP Is the New Acronym for Retirement Readiness!

by Krantcents · 6 comments

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CAMP is not a place with temporary accommodations of huts, tents, or other structures, typically used by soldiers, refugees, prisoners or travelers. When I was a child, I went to camp to escape the New York summers. CAMP is not a destination! If you do not know what CAMP is, you should! CAMP is a way of realistically measuring your retirement readiness. 

What is CAMP? It is an acronym for four key retirement concerns! There are hundreds of retirement calculators that barely touch on some of these concerns. The various calculators are just supposed to help you determine how much you should save for retirement. Are you on track? Can you maintain your current lifestyle in retirement? Do you have a pension, Social Security or IRA? How long did you plan on living in retirement? Will it be enough?

What is CAMP?

  • Cash flow – In this case, cash flow is the amount of income you receive from all sources in retirement which is intended to replace your work income. Can you live on a lower income than you received when you were working? Are your expenses lower in retirement? I know I will no longer have an eight (8%) percent pension deduction in retirement. Also, I will no longer save thirty-five (35%) percent for retirement. Based on those two deductions, I can live on sixty-seven (67%) percent of my monthly income. How much do you need in income during retirement?
  • Aging –I expect to live as much as thirty (30) years in retirement. I may need assistance in my later years at home or in a facility. I will need Long Term Care insurance. Long term care (LTC) can cost $6-7,000 per month in today’s dollars and it could be for years.. You need LTC insurance to cover the support and services you might need for your daily activities and cognitive impairments at home or in a facility. I bought LTC insurance for my wife and myself to avoid depleting my savings.  You may not need LTC insurance, but how will know?
  • Medical - As we get older, medical expenses are a bigger factor. Although you are eligible for Medicare, there are deductibles and co-payments. Many older American buy gap insurance to cover these uncovered medical expenses. If you do not have gap insurance, you will have to pay these medical expenses from cash flow. How will you cover your medical expenses?
  • Purchasing Power – Inflation destroys your purchasing power. The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of consumer goods and services. How do you keep your income inflation proof? You need to generate enough growth to keep up with inflation. The CPI less food and energy is typically used for Social Security or pensions increases. It is commonly called a Cost of Living Adjustment (COLA). The Federal government thinks food and energy is a commodity which goes up and down. It can materially affect your purchasing power! What are you going to do?

Final thoughts

Are you thinking about retirement? If you are fifty (50) or older, you probably thinking about retirement quite often. You probably start with how much savings you have, but as I pointed out, it is not enough. I approached this question before there was an acronym! I divided my needs and wants in terms of cash flow. I covered my needs with cash flow that had COLA annual increases. My wants are funded by my stock market asset allocation that will grow faster than inflation.

I am fortunate enough to have a pension that has lifetime medical/dental/vision insurance along with Medicare. My wife and I took out Long Term Care insurance to cover our expenses in our later years. My mother needed long term care in her later years. These issues are not normally included in retirement calculators, but should be. How are you going to address these factors? CAMP are factors you should consider when you are getting ready for retirement!

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{ 6 comments }

Zee @ Work To Not Work July 15, 2014 at 12:37 am

I still have a number of years until I’m financially independent. 10 years ago the thought of universal health care was a joke in the US. Today, it might still be a joke to some people but at least it’s more of a possibility. Who knows what another 10 years will be like.

So for right now, I’m just saving as much as I can to set me up for success when the time comes.

Krantcents July 15, 2014 at 7:50 am

Good job! You cannot rely on things that have not happened yet. Independence is relying on yourself.

Alexis July 15, 2014 at 8:12 am

Thanks for sharing this great article. This is the most effective way to know some reminders when you want to retire. This will be very useful and helpful for making decision in the near future. Read and understand the article and you will get a brilliant idea. I will share this information with my friends and they will certainly love to read this. Very informative, I’ll definitely give these 5 stars.

Krantcents July 15, 2014 at 11:31 am

Thanks. Since I am close to retirement (again), these are some of the things I thought about years ago.

Ryan @ Impoersonal Finance July 15, 2014 at 10:03 am

Awesome acronym. I think too many people focus on just the lump sum, and don’t conisder everything they need to retire successfully.

Krantcents July 15, 2014 at 11:28 am

I did not create the acronym, but I like it too. I have spent a number of years thinking about how I want to spend my retirement. I am about 2-3 years away and I think I finally have the plan down. The money for retirement is the easier part. Let’s face it, it is a goal and you can achieve it. The details of your retirement goal are more complicated. What you do in retirement is much harder!

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