If you feel like you’re behind on saving for retirement, you have company. Saving for retirement a sizable challenge. A 2017 Gallup study found that more than half of Americans are worried that they won’t be able to afford retirement.1
It’s never too late take action and make improvements to your retirement savings efforts. A few simple changes may be all that’s necessary to get you back on track to live the retirement you’ve always imagined.
Of course, before you can take action, you need to analyze your planning and identify areas for improvement. Below are a few questions to ask yourself about your retirement and your current financial situation. The answers to these questions should provide some guidance as you develop and strengthen your retirement plan.
How much will you spend in retirement?
The main goal of most retirement strategies is to generate enough retirement income to fund your living expenses. Of course, you need know how much income you will require. You can’t predict the future, so it may be difficult to precisely calculate how much you will spend each year in retirement. However, you can probably make an educated guess.
Think about your plans for retirement and generate a ballpark of how much those plans may cost. How will you spend your time? What bills might you have? Will you stay in your current home, or will you downsize?
Also, don’t forget inflation. That’s the gradual increase in the cost of goods and services each year. Even modest inflation can have a big impact over time. Your cost of living will likely increase throughout your retirement, so that should be reflected in your estimated expenses.
Will you have guaranteed* income from retirement and other sources?
You will likely have some level of income guaranteed through retirement, no matter how long you live. At a minimum, you will receive Social Security benefits. You can get an estimate of your benefit amount from the Social Security Administration. You may also have pension benefits or other income.
Add up your total estimated income. Is it enough to cover your estimated expenses? If not, you’ll have to bridge the gap by either adjusting your lifestyle or taking withdrawals from your retirement savings.
This exercise should give you a ballpark estimate on how much you’ll need to save to fund your retirement. You also may want to consider an annuity, which can help you convert some of your savings into guaranteed lifetime income. A financial professional can help you develop a strategy.
What is your plan for emergency costs?
Finally, plan for emergency expenses to arise during your retirement. You could face costly home or car repairs. You may need expensive medical procedures. You might even need long-term care, which can cost thousands of dollars per month.
Consider your strategy for covering these unexpected costs. You may want to keep a stable, liquid reserve fund for emergencies. You also may want to consider long-term care insurance to help pay for any extended assistance that is needed.
Ready to jump-start your retirement income strategy? Let’s talk about it. Contact us today at Advantage Retirement Services. We can help you analyze your needs and develop a plan. Let’s connect soon and start the conversation.
*Guarantees, including optional benefits, are backed by the claims-paying ability of the issuer, and may contain limitations, including surrender charges, which may affect policy values.
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