How Long Will My Retirement Savings Last?
It’s no secret that people are living longer and longer these days. And that’s fantastic, except when it comes to planning your retirement. It means you have to be that much more disciplined about getting your financial house in order; otherwise you may outlive your money.
Just how long will you live?
With so many things to factor into planning your retirement, calculating longevity can become one of the things that often falls between the cracks. But it’s one of the most crucial factors in accurately calculating how much money you’ll need to last you for the long haul. A good place to start is the Social Security Administration’s Life Expectancy Calculator. This will give you a life expectancy calculated by your date of birth and gender, as well as life expectancies at future dates. In addition, think about the longevity of your immediate relatives. Did your grandmother live to be 102? Did your older sibling pass away from an illness? Are your parents fit and sharp in their 70s and 80s?
It’s also important to factor in your lifestyle. Do you spend your time painting or rock climbing? Would you rather practice yoga or go bungee jumping? Think about whether the activities you enjoy are risky or not.
Last but not least, consider your own health. Factor in any medical conditions you may have, but don’t forget about things like flexibility, balance, muscle strength and mental agility. All of these things will give you a complete picture of your overall health.
Bringing it all together
Be holistic and realistic when you’re calculating your longevity. Use that information and your planned retirement age to figure out how many years you can expect to live in retirement. This will help you calculate how much you will need each month so you can enjoy retirement to the fullest - while helping to ensure that your money will go the distance with you.
This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. We recommend that you consult an independent legal advisor or financial professional for specific advice about your individual situation. The information herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.
Retirement Budgets: The “B” Word - Helping you balance your money and your lifestyle.
“Budget.” It doesn’t exactly conjure up images of the carefree retirement you’re planning for, does it? So let’s discuss your “spending plan” instead, and focus on managing expenses and finding a balance between the money you have and the lifestyle you’re dreaming of when you retire. Rather than confine you, a spending plan can allow you to spend money on the things you really want.
Look at the variables
When you’re creating a spending plan, you’ll want to consider what your fixed and variable expenses are now and what you estimate they’ll be in retirement. Your fixed expenses will include your mortgage or rental payment, weekly groceries and any other consistent payments you make. These will be easier to plan for than the variable ones. Here, you’ll have to be creative. Will you be traveling, taking your grandchildren to baseball games or picking up new hobbies when you retire? Think about the activities you do now, how much they cost and whether that cost will increase when you have more time to do them. We like to call this: Understanding your Needs, Wants and Wishes for Retirement.
Make your pre-retirement budget a retirement spending plan
Pull out your existing budget. Take a look at your expenses and estimate which ones will go up and which ones may go down. Some may go away completely, like employment-related expenses. Others may need to be added, like health insurance if you’ll no longer be covered through your employer. Detail all of your expenses, but don’t forget to detail income sources such as Social Security, retirement accounts and pensions too. It is also important to note whether your income sources are pre-tax (you will still need to pay income taxes) or after-tax (you do not owe income taxes and will be able to spend the entire amount). Our budgeting (we mean spending plan) worksheet is a helpful tool.
Plan on having a good time
Taking the time to create a realistic spending plan can give you a sense of certainty. It can help provide you more freedom to spend money on what you want, without breaking the bank. And isn’t that what retirement’s about?
This material is provided for general and educational purposes only; it is not intended to provide legal, tax or investment advice. All investments are subject to risk. We recommend that you consult an independent legal advisor or financial professional for specific advice about your individual situation. The tax information herein is not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding tax penalties. Taxpayers should seek advice based on their own particular circumstances from an independent tax advisor.