Questions you should ask yourself about retirement?

When planning for retirement many different areas must be addressed. Failure to properly plan for both growth and tax advantage could cost you a fortune.

How do I find out how much money I will need to retire?

You know that Social Security and your company pension plan will only provide for less than half of the money you will need during your retirement years. So what will you do and where will you go to make up the difference.

Incredibly enough, most people don’t stop to figure out how much they will really need for retirement. Research conducted by the International Association for Financial Planning shows that the number one goal of most Americans is to retire comfortably. People do not realize that a small investment each year could create a portfolio large enough to help meet future needs.

How much income will I need during retirement?

On the average, Americans need approximately 70% of their salary to retire comfortably, but you can calculate a rough estimate. Take your current budget, subtract expenses related to raising children, mortgage payments, and of course job related expenses. Then add to your total the estimated cost of travel plans and remember to add for increased medical care. Your ending total will give you a rough estimate of the money you will need on an annual basis for retirement. Also take into consideration that on average you will live for 20 to 25 years after you retire.

What does a retirement plan look like?

A retirement plan is designed to help you determine your income needs during your retirement years and then to develop a planned investment approach to help you attain these needs. Developing a retirement plan involves estimating future income needs in today’s dollars and calculating that amount in future dollars, based on inflation rate assumptions. Secondly, you will need to estimate income from Social Security, employee retirement plans and any other sources. Thirdly, calculate the additional amount that you will need and make a reasonable assumption about your life expectancy. You must also estimate the lump sum necessary to generate the additional dollars needed during retirement years and compute how much you will need to save annually and what rate of return will produce the lump sum.

Is there a way to cope with inflation?

To cope with inflation you must make your money work harder. Inflation is the biggest threat to your future financial security. Investments like savings accounts, certificates of deposits and U.S. government bonds, usually just keep pace with inflation. Investments such as real estate and gold generally appreciate faster when it’s high, but may lose value during periods of low inflation. Consistently, some types of mutual funds and variable annuities have earned returns at a much higher rate than inflation in long periods of time, but at the risk of short-term drops in value. We advise you to diversify your assets among several different investments, depending on your individual situation and the level of risk you are comfortable with.

The Answer?

Begin by contacting our office for a free consultation to discuss your financial needs and to answer any questions you may have. Then we can develop a plan that is designed specifically for you. This will help you overcome the hurdles you face when planning for your retirement.