Have You Budgeted for Retirement?
It’s important to think about what you’ll need in retirement BEFORE you retire. Run the numbers - often, people need about 70-80% of their end salaries after retiring, but this can vary. So, years before you leave work, sit down for an hour or so (perhaps with the financial professional you know and trust) and take a look at your probable monthly expenses. Online calculators can help!
The closer you get to your retirement date, the more exact you will need to be about your income needs. You first want to look for changing expenses: housing costs that might decrease or increase, health care costs, certain taxes, travel expenses and so on. Next, look at your probable income sources: Social Security (the longer you wait, the more income you can potentially receive), your assorted IRAs and 401(k)s, your portfolio, possibly a reverse mortgage or even a pension or buyout package.
While selling your home might leave you with more money for retirement, there are less dramatic ways to increase your retirement funds. For instance, you could realize a little more money through tax savings and tax-efficient withdrawals from retirement savings accounts, by reducing your investment fees, or by getting your phone, internet and TV services from one provider.
Retirement budget-wreckers to avoid. There are a few factors that can cause you to stray from a retirement budget. You can’t do much about some of them (sudden health crises, for example), but you can try to mitigate others, like:
- Supporting your kids, grandkids or relatives with gifts or loans.
- Withdrawing more than your portfolio can easily return.
- Dragging big debts into retirement that will nibble at your savings.
Budget well and live wisely. Planning for retirement by creating a retirement-oriented budget makes a lot of sense! A well thought-out budget, (and the discipline to stick with it), may make a big financial difference. For help with budgeting for retirement, contact me, Ken Toops – I want to help you succeed!
Want more articles from Ken? Check out this article: "How Much Money Will You Need In Retirement?"