According to conventional retirement wisdom, Schullo and Robertson should not be enjoying their comfortable (and in some ways lavish) retirement.
Not only did they face a huge loss, these two career educators made many other missteps in their planning:
- Neither started saving until they had reached their late 30s.
- Based on bad advice from agents and advisers, their first investments were in annuities that were inappropriate for their needs.
- When they did take control of their investments and began buying mutual funds, they overinvested in tech during the dotcom bubble of the ’90s. That is why they saw their nest egg drop from over $1.5 million to $460,000 in a matter of months.
Schullo and Robertson live primarily off their pension and Social Security benefits that come to about $75,000 per year and plan to maintain the principal of their nest egg indefinitely.
Their success story highlights that the path to retirement does not have to be perfect, as long as you make intelligent decisions along the way. Here is what you can learn from them:
Schullo’s first experience with investing for his retirement was through an insurance agent selling annuity products at the school where he taught. Even though it was unclear how the agent was compensated — which made Schullo somewhat wary — he went ahead and purchased an annuity from her.
But that turned out to be a mistake.
The rates promised by the insurance company in the promotional literature did not match the actual rates he saw. Buried in the fine print was the caveat that the insurance company could reset the rates as it saw fit. When he discovered the bait-and-switch tactics, Schullo realized that it was foolhardy to trust others with his retirement decisions. He needed to understand exactly how the investment process worked.
“You have to be involved in your own investing,” he says. “And you do not have to be a professional or earn an MBA to be an educated consumer.”
Upon coming to this realization, Schullo and Robertson decided to learn as much as they could about their options to figure out what would help them grow their money.