Life after the office will present a new set of financial challenges.
When it comes to retirement planning, it’s no longer enough to simply think about saving enough money. There are many factors to consider and discuss with your financial professional.
Things to discuss with your financial professional:
Taking distributions from your retirement savings at the wrong time
Living longer because of good health
Experiencing the rising cost of healthcare and inflation
Use the exercise below to estimate how prepared you may be to face and potentially overcome these challenges and the rising cost of retirement. This could provide a foundation for discussion with your financial professional. And it could bring to light any gaps in your financial readiness.
Will you have an income gap
Pensions and Social Security used to be the main funding for retirement. Now the responsibility lies with retirees, and their personal assets play a more significant role.
An important step in planning your future is identifying your priorities. Do your assets and financial plan support that vision, or should you explore some options? You can use this guide as a tool to determine whether there’s a gap between your income needs and the sources of guaranteed income you could use to fund those needs. Once you’ve determined if you have a gap, you and your financial professional can discuss how to cover it.
Map out some expenses you expect to have and how they can add up over time.
What will I need?
When planning for retirement, think of your income needs as part of a pyramid. Your essential, daily expenses make up the base of the pyramid. You’ll want to start with these expenses before potentially including expenses in the next levels of discretionary income.
Calculate your income gap
Fill in the tables below with your current monthly expenses and projected retirement income to calculate your income gap.
At the bottom of the calculator you can download a spreadsheet with your information and results.
What can I count on?
Now that you've estimated what your expenses could be, use this section to calculate the guaranteed income you expect to have. This could include distributions from investments or a part-time job. This will help determine the gap between what you'll need and your projected available resources.
You are on track to cover your expenses.
This worksheet is only meant to be a guide to help you estimate how much you may need to cover expenses in retirement. It is only a high-level overview and does not constitute investment advice, nor is it a measure of investment suitability. Individual investors should ultimately rely on their own judgment and/or the judgment of a financial professional when making investment decisions.
Whether you're on track to cover your expenses in retirement or expect to have an income gap, it can be a good idea to explore ways to increase the amount of guaranteed income you'll receive. Consider working with a financial professional to define a strategy or identify goal-oriented solutions. Click on the links below to learn more.
