Most Americans CAN imagine retirement! Days at the beach, fishing, travel, shopping, visiting the family or rocking in the hammock in the backyard. But for most Americans that is where it begins and ends, in the ‘imagination’.
The fact is that most Americans do NOT have a Retirement Plan. You may have seen the commercial on TV that asks the question; ‘what is YOUR number?’ Most Americans couldn’t tell you what THEIR number is! That number represents the assets that are needed to sustain a successful Retirement Plan.
What is a successful plan? For many it’s when their money outlives them and not where they outlive their money! A successful plan requires taking stock of what you REALLY need in order to be happy in Retirement.
Most are content with just imagining but very few are willing to do the sometimes uncomfortable self-examination necessary to pull it all together and Plan IT!
The first painful step is to consider your expenses in a ‘post-retirement’ world. To do this you have to enter the Virtual Retirement time machine! No, really, you have to project out what your expenses will be in the future. And, you have to go Back to the Future yearly to continue to look forward into the future and IMAGINE what your future world is going to be like.
Hey, this stuff is fun! Right? Well, for most Americans it doesn’t seem so.
In order to look into the future to figure out what your needs will be you first must write down EVERYTHING you spend money on today. You have to know where you are now in order to know where you are going!
With that all down on paper you do a second list and this time strip out all the expenses you will no longer have at retirement. This can be paid loans, lower taxes if you plan to move, lower household bills if the children are on their own, etc. Now, what would that look like in today’s dollars?
Next project those expenses out to the age you will retire using an inflation rate you are comfortable with. Let’s say 3%. Now you will have an expected income need at this future date to cover those expenses. Continue to look at this yearly so that you can be as realistic with these expenses as possible based on what things cost and making sure you still feel the same way about how you will live your life in retirement.
In other words, Get out of Your Dreams and Into your Plan! So, now that you have the basis of a goal or a need, you will need to work on projections of your assets and savings and sustainable withdrawal rates at retirement.
To do this it would be best to sit down with a financial planning professional who can guide you on how to make those projections. You will need to determine accumulation rates, withdrawal rates and sustainability and probabilities of outcomes. Also, you will need to know how to best utilize Social Security and pensions. Social Security can be very complicated and there are many options that can have a major impact on your lifetime benefits. Most importantly, you will want to see how to avoid running out of money!
Look, if you were lost in the Amazon Jungle would you want to read a book to get you out or an experienced Jungle Guide? At the end of the day, or end of retirement, it’s the well prepared that will have the most chance at success and survival.
Hey, it’s a Jungle out there but you can DO IT!
Now turn Imagination into Action and make sure you Plan it so you can Live it!
Registered Representative offering securities and advisory services through Cetera Advisors LLC, member FINRA/SIPC. Some advisory services also offered through Rockdale Financial Services, Inc., a Registered Investment Advisor. Cetera is under separate ownership from any other named entity.