This is probably the most common question we are asked about retirement as Financial Advisors. To answer this, it’s important to think about what you’ll need in retirement and start planning BEFORE you retire.
Often people need at least 80% of their end salaries in retirement, but this can vary based on your desired lifestyle and cost of living, which tends to be relatively high here in New Jersey. Years before you retire, sit down and take a look at your monthly expenses in retirement. Online calculators may help you get started, like the ones on our website.
As you approach your retirement date, you’ll need to be more exact about your income needs. Start by examining changing expenses: housing costs that might decrease or increase, health care costs, and taxes for example. Next, look at your income sources: Social Security (delaying may increase your income), your IRAs and 401(k)s, other investments and any pension or buyout package offered.
Selling your home might provide more money for retirement, however, there are less dramatic ways to increase your retirement funds. Consider ways to realize tax savings and tax-efficient withdrawals from retirement accounts. Getting your phone, internet and TV services from one provider may help you save money too.
Budget-wreckers can cause you to stray from your retirement budget. Some are hard to avoid like home repairs, but you can try to mitigate others:
- Supporting your kids with gifts or loans.
- Withdrawing more than your portfolio can return can sustain.
- Carrying major debts into retirement.
Creating a retirement budget makes a lot of sense. A well thought-out and realistic budget you can stick to may make a big difference.
About the author: Scott Jones, CRPC®, RFC® is the Founder of Genesis Wealth Advisor Group, LLC. Genesis maintains offices in Mount Laurel, NJ & Dunedin, FL. For more information, visit www.genesisadvisorgroup.com or call: 856.283.3959 for a complimentary retirement income plan review.