Bill Gates recently retired from Microsoft and with his net worth of $56 billion; he will probably make out okay. However, they rest of us could do with a little more planning to ensure that we have enough to make it comfortably through our golden years.
When Bill Gates announced his retirement as chairman of Microsoft earlier this year, there was much fanfare. He was spoofed by colleagues and celebrities alike. He even had a little fun with himself during his final address to the Computer and Electronics Showcase (CES2008).
Bill Gates retirement announcement at CES 2008
Bill Gates retirement skit on David Letterman Show – Warning: Some cursing/adult language.
When I retire, I doubt that there will be much of a commotion. I’ll be lucky to get a small party with frozen cake, nacho chips and fruit punch. If I adhere to the statistical mean, I can predict that I will have been with four to five additional employers and that my retirement accounts will be fragmented between several different financial institutions. It is also predicted that social security will be insecure by the time I reach the mandated full retirement age. This picture is further complicated if my career goes global, or if I decide to retire abroad.
There are many considerations to take into account when planning for retirement. The problem is that many of us just don’t take the time to do it—at least not until it is too late! The most important thing to do is to put away as much as you can early in your career to take advantage of compound interest. This is not easy for anyone, but the math is simple enough to understand. I have gotten off to a late start with graduate school, postdoctoral studies and teaching taking up the majority of my early earning years. However, I am trying to make up for lost time and income by putting away as much as I can each month through an automatic payroll deduction. Automating the process keeps the money out of my hands and lessens the probability that I will spend it on something less worthy.
Portability is also a key consideration when planning for retirement. While I was teaching at the University of Hawaii, I was able to invest in retirement accounts through TIAA-CREF. That is a good thing since all of the money that the university put away for my retirement in the state system was forfeited when I left. If I had not invested funds in my own account outside of the state system, I would have lost all of my retirement savings up and until that point.
If you haven’t started thinking about retirement or are confused about your options, there are plenty of good sources of information online. AARP and Yahoo both have excellent investment guides. Most financial institutions also offer advice, but be aware that they are trying to sell their products, so a neutral and unbiased source of information may serve you better.
In closing, it should be noted that I am not a financial expert. I’m a chemist. So, I would not expect you to take my advice any more seriously that Bill Gates has done. Then again, if he had invested heavily in Apple stock a few years back, he might have had a few billion more to spend.
This article was written by David Harwell, Ph.D., assistant director of the ACS Department of Career Management and Development.