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Survive or thrive in retirement? Income planning may be the key
It’s time to get real about the assets you’ll need to make your retirement dream happen. Consider sitting down with your partner and your financial advisor to address these four important questions:
How much will I need to cover my living expenses in retirement?
You’ll need your retirement savings to cover basic living expenses. Plan ahead and get an idea of what you’ll need by estimating expenses on:
- Other routine expenses like haircuts and self-care services
Do you need to cover these expenses for anyone besides yourself, such as a parent, child or grandchild? Figure in those costs too.
Can I afford to enjoy my retirement?
Can I afford to enjoy my retirement?
Don’t just survive in retirement. Thrive! That means having the financial ability to enjoy the activities and experiences that interest you. Build them into your budget, that way you’ll know whether your travel expectations involve a tent or a five-star resort.
How will my financial needs change during retirement?
When you first retire, you may spend more on travel and family activities. Later, you will probably spend more on healthcare — an expense many people underestimate.
Health savings accounts and retirement health savings plans can help you address these costs. Ask your financial advisor about options that can help provide you with the money you need as your priorities shift over time.
What can I consider doing to boost my retirement income?
Once you have a clear idea of your basic living expenses and your discretionary expenses, it’s time to figure out if you’ll have enough money to last long-term. Identify your sources of post-retirement income, both guaranteed and not, such as:
- Social Security
- 403(b) or 401(k) plans
- Investment and bank accounts
- Earned income
If you think income sources will fall short of your anticipated needs, look for ways to save more now, or pay off more debt, or both.
Time is a significant risk to retirement income, but also a young saver’s biggest advantage, thanks to the power of compounding. Start saving as soon as you can, be disciplined, and make sure your retirement income comes from various sources.
Thinking about the income you’ll need may be reassuring or stressful, depending on your situation. But, it’s a necessary step to help you figure out what you can do now to live the way you want later.
The information is provided for informational purposes only and is intended to engage you in thinking about your financial planning needs. Of course, each person's results will vary based on various factors, including, but not limited to, the products or strategy selected.
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