No Guarantees in Retirement
Billy and Akaisha Kaderli
The Motley Fool    Yahoo News    Yahoo Finance

Success stories are regular features of our Motley Fool Rule Your Retirement newsletter service, where we share profiles of people who have become financially independent. One of the most remarkable stories we've come across is that of Billy and Akaisha Kaderli. At age 38, they left their fast-track lives and started traveling the world. We caught up with them in Chapala, Mexico. Here, Billy and Akaisha address the recent market volatilities and their affect on your retirement plan.

People often tell us they are going to wait a few more years to retire. They point out that by waiting, they will have health care provided for life and a pension that will let them afford the same lifestyle they're accustomed to. They won't have to scale back on spending or make awkward choices concerning their budgets. Not only will they not need to relocate to a city or state that is more affordable, they will be able to own two houses: one at home with their country club membership, and another on a lake, near a beach, or in a foreign country.

Sounds great
These people have worked their entire lives for this remarkable retirement plan. They have made personal sacrifices throughout the years in areas such as spending time away from the family, pursuing hobbies, and taking long sabbaticals. They have made these choices because in doing so, their retirement plan will be fully guaranteed. After investing 35 or 40 years of their working lives, saving their money, raising children, and putting their own personal wants on the back burner, they now look forward to that day when they can relax and finally enjoy the life they deserve. No tough decision making, no cutting back on their consumer habits.

Or at least, that's how they think it'll be.

Lesson learned
What we have learned in our almost two decades of financial independence is that the perfect time for retirement simply doesn't exist. Things change, and sometimes radically. There simply are no guarantees.

What are the employees of the 158-year-old Lehman Brothers thinking now? How many of them sacrificed their personal lives, only to face huge insecurity now? Many have huge losses in their 401(k) retirement funds from company stock. It's a financial and emotional storm no one wants to go through.

Lehman certain isn't the only company that has faced those concerns. On Wall Street, Merrill Lynch (NYSE: MER) hopes a merger with Bank of America (NYSE: BAC) will help it avoid Lehman's fate. Elsewhere, companies like General Motors (NYSE: GM) and United Airlines (Nasdaq: UAUA) walk a thin line as well, and their employees consistently try to do quality work while remaining concerned about their own well-being. How thin will that line get before it, too, collapses?

Perhaps your personal plan for retirement was to take big amounts of equity out of your home. Oops.

Where can you look for comfort in times such as these?

Cutting back isn't bad
If you have based your future retirement life upon the idea of keeping the same level of spending after you no longer have a paycheck coming in, these current financial challenges will come as a huge threat and shock to you. The days ahead could be ones of dread and fear.

But if you have learned to live below your means, have kept your monthly expenses reasonably low, and have not loaded up with huge amounts of consumer debt, market days such as the ones recently are like an uncomfortable bump in the road, not a life-defining event.

What if you find yourself awash in a financial storm and the days down the road seem dark and menacing? If your retirement dreams seem to be permanently shelved, try some of the following steps to regroup:

1. Be independent. Make your own retirement investments independent of your employer's plan. Don't rely solely on your employer for your retirement, whether it's through a traditional pension or with company stock in a 401(k). This way, if your company goes under, you'll still be in control of your future.
2. Stay calm. People retire every day, in good times and bad. Like deciding to have a child, it's never the perfect time. Realize that it's normal in life for unforeseen events to rattle your confidence level, so try not to let it faze you. Above all, do not make a reflexive emotional decision about the rest of your life by making a bad trade.
3. Know where you stand. Get support from your past good behavior. If you have been tracking your spending and living below your means, you know exactly where you are financially. The confidence and discipline of controlling spending should give you great self-assurance that you can weather any storm.
4. Look for buying opportunities. This could be a great time to review your portfolio to see whether you have been overconcentrated in one stock or in one particular sector. Look for buying opportunities elsewhere in the market to even out your overall exposure to risk.
5. Consider other work possibilities. If the idea of retiring fully frightens you, consider working part time, cutting back the hours at your current job, doing consulting work, or starting a second career. You'll still earn income, but you may not have the same work demands that your current job makes of you.
6. Get creative. Finally, consider other alternatives for the expression of your retirement life. Perhaps you now have the incentive to think about relocating to a smaller home, a more affordable city, or to own one vehicle instead of two. You don't need to shelve your future plans entirely. Find other ways of scaling down pressure and moving toward fun, relaxation, and new ways of self-expression.

Interested in learning more? The Fool's Rule Your Retirement newsletter has looked at all of these ideas in depth, as well as others that may appeal to you. By reading about things that people like us have done in retirement, you can get a more realistic sense of your own options. Take a look free with a 30-day trial.

Billy and Akaisha continue to journal and photograph their world travels.

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