If you are approaching retirement or already retired, you face the increasingly complex challenge of planning for the income you will need that will last the rest of your life.
Today’s retirees approach retirement very differently than previous generations.
- Many people have high expectations for their retirement years.
- With an increasing life span, spending more than 30 years in retirement is a realistic possibility.
- However many employers today offer little to no pension. And many offer no health coverage for retirees.
It is important that you build a retirement income plan that will carry you through the rest of your life. It’s never too early to start. And if you are near or in retirement now, be sure to address this at least annually to better assure you will be able to remain on track and not run out of money.
Below are issues to consider when developing your retirement income plan.
- Determine the amount of income you will need in retirement: Create a realistic budget based on the lifestyle you want in retirement. Determine your priority order for budgeted items. If you cannot “have it all”, this will help assist you in making adjustment to the amounts budgeted
- Consider all of the sources of income available to you: Evaluate all income sources keeping in mind when the optimal time is to start the income from each source. Many retirement income sources provide a different amount of income to you based on when you start to take it
- Compare your expected income from all sources against the amount of income you determined you will need
- Earmark predictable sources of income to cover essential expenses, and assign less predictable sources to fund discretionary expenses
- Allocate your investment portfolio appropriately
- Monitor your plan at least annually
Although conservative investments may be more secure, they also can provide less opportunity to keep up with inflation. It is imperative that you allocate your assets according to your risk comfort level, time frame, investment balance and other factors to maximize return potential within your comfort level.
Work with your advisors as least annually to make necessary adjustment to better assure you remain on track.
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