While you work at your nine-to-five, you will need to start your retirement income planning efforts and save up for your golden years. However, saving enough money to build a stable nest egg is only half of the equation; you will also have to identify a sustainable rate at which you can draw from your funds after you have cashed in the last paycheck from your employer. To ensure that you are financially secure when you retire, you will have to develop a budgetary plan that takes these factors and considerations into account:
A solid plan for budgeting retirement cash and expenses has to be in place way before you say goodbye to your career. Live You should approximate how much you will spend in your golden years, as there will be no way to determine if you have enough of a nest egg to live on prior to calculating your expected retirement expenses. As a reference, your current budget may be used to gauge retirement spending, although adjustments will need to be made. For instance, while commuting and wardrobe expenses may go down in retirement, you may have to channel these savings into healthcare or spend more money on hobbies and entertainment.
Start creating an income plan for retirement by identifying the overall sum of every guaranteed income source in retirement. These can include annuities, pension or retirement account payments, and Social Security benefits, but not the the profits you gain from bonds, stocks, and other investments in your retirement portfolio. After determining how much you are set to receive in the form of guaranteed income, you can then calculate how much you need to withdraw for monthly retirement expenses.
Calculating Income versus Expenses
There are many online tools that help you determine retirement income, expenses, and other related data at no cost. For example, these tools may be used to gauge how much your expected IRA and 401K withdrawals will net you once you have stopped working. It is recommended that you use various online retirement calculators to get a better idea of your expenses and income, as different calculators use varying formulas to give you a sustainable withdrawal rate for your retirement funds.
Some experts recommend gauging your budget and comparing it to your guaranteed retirement income through face-to-face consultations to give you more accurate results, after which they can determine how much you can safely withdraw from your nest egg. For more detailed and accurate information that can strengthen your income planning for your golden years, consult with an investment advisor specializing in retirement income.
Katherine Smith is an author who specializes in financial topics concerning seniors. Puritan Financial Group gives seniors reliable investment options to help them strengthen their income planning strategy. For more information on how Puritan Financial Group can help you, please visit our website at http://www.puritanlife.com/solutions/retirement_planning.