One of the most common reasons why clients seek our services is retirement. And there are many questions involved in the topic: how to determine if you can afford to retire, how to invest in order to be able to retire, how to invest after retirement, how to get a handle on how much it costs to live in retirement. Sometimes people put off planning because there is so much about the future that is unknown, it seems futile. But we can always get an idea of what is likely to happen, and that is the basis for planning.
The first task is to be able to fill in the blank in this sentence: “I think retirement will work out for me, because I will have ______ dollars coming in every month and that will let me live as I planned to.” We believe this is a better approach than using some percentage of pre-retirement income.
We know from working with hundreds of people over the years there is a wide range of actual outlays people in different circumstances spend in retirement. The key factor for you, however, is how much money you will need to do what you want to do. Some people travel, others do more gardening. One takes money, the other saves money. We can help you determine what you will need for your retirement.
The planning process might be vague or uncertain at the beginning, especially if you are seven or ten or more years away from retirement. As the years go by and you get closer, your plans will gain precision. After all it is much easier to predict a year or two ahead than a decade or two ahead. So the best course of action is to get started on a course of action. You can fine-tune your plans as you go along.
The second step is to add up the resources that will help provide income in retirement. These include monthly benefit amounts like Social Security and pensions, as well as lump sum retirement savings in the form of IRA’s or 401(k) or other retirement accounts, and other savings and investments.
Once you have a sense of your retirement income needs and resources, we can start in on the arithmetic and projections that will help you understand if you are on track. The next article in this series will cover our methods and philosophy for retirement calculations and investments.
If you would like to discuss your situation in detail, please schedule an in-office meeting or telephone conference. We enjoy the discussion, and never charge for it.