Find Out What Will Your Retirement Income Be?
When you retire and no longer get a weekly paycheck, your bills don’t stop. You need money each month to keep the lights on, eat, and cover a number of other expenses. Before you say your goodbyes to your coworkers, you should think about the income you will need to live the type of lifestyle you want to live in retirement.
Although you may not know exactly how you will generate the income you need during retirement, now is a good time to start thinking about your possible options. How much have you saved and how can you best allocate that money to generate retirement income?
People Underestimate Their Retirement Income Needs
Predicting how much money you will need to live comfortably is obviously not an exact science. You need to make some assumptions. If those assumptions are unrealistic or just way-off, you may not be able to generate the income you will need during your golden years. Be conservative when analyzing the key factors that will determine how much income you will really need.
- Length of Retirement – One of the top fears people have when they retire is that they will outlive their money. If you live beyond your life expectancy, that could impact the total amount of income you will need.
- Failure to Adjust for Inflation – While inflation may be low when you retire, it may not stay low. If inflation hits double-digits like it did in 1980, and your income stays the same, your purchasing power will be seriously eroded.
- Being too Optimistic about Investment Returns – Making the assumption that your investments will earn a higher rate of return than they actually do can lower your retirement income.
- Failing to Consider all Foreseeable Expenses – In addition to projecting normal living expenses such as food, clothing, shelter and health care, you should also add discretionary spending into the calculation.
Your Retirement Income
The more certain you can be about all of your expected streams of income you will have, the more accurately you can predict what your retirement income will be.
How can you start planning now for success? Check out this article about Planning a Successful Retirement