Retirement income planning is complicated, but is essential to help ensure you have enough retirement income after departing from your job. Whether you want to travel or live in a warm climate, here's a quick guide to help you develop a strategy to fund your retirement:
Decide When You'll Retire Not long ago, the typical retirement age was 65, though some people retired sooner or later than that. Nowadays, people are living and working longer and, as such, the retirement age has risen. According to the Social Security Administration, the "normal retirement age" is now 67 for people who were born after 1959.
Of course, this doesn't mean that you have to retire the day you turn 67, but figuring out when you want to retire is essential to creating a retirement income strategy. This makes sense since you will need to estimate how many years your money will maintain your lifestyle. However, it's not a good idea to plan to work up until the day you die, as there are many factors that could make you leave the workforce sooner than you'd hope, including medical reasons.
Estimate Your Life Expectancy While it may seem like a morbid subject, estimating how long you will live can help you better plan for funding your retirement. One common concern among seniors is that they will run short of money. Having a more accurate estimate can help counter this concern. According to the Worldbank.org, Americans live to an average of just older than 78,1 though other estimates may imply you will live longer. To get a more accurate estimate, you can utilize online calculators that will take into account your personal information. In general, it's better to overestimate rather than underestimate.
Determine Your Retirement Income Needs When you leave the workforce, you will still need to pay your monthly expenses. Though they may be smaller or larger during retirement, you should determine your needs. These will typically include:
Food and clothing
Housing
Travel
Health care costs
Taxes
Insurance
While these are just some of the basic expenses you will have, you need to ensure that your retirement income can cover these costs.
Identify Sources Of Retirement Income After determining many aspects of your retirement, you should identify where your retirement income will come from. In general, it is a good idea to have a few different sources of income, including pension or employer retirement plans, savings and Social Security income. Combined, your different types of income can make retirement more financially successful. You should also consider purchasing an annuity to help provide you with payments for the rest of your life with a guaranteed* return.
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