The very first question you need to ask yourself when you decide to retire is, “What will it cost to continue to live the lifestyle I am accustomed to and WANT for the rest of my life?” That may seem like a difficult question to answer, and it can be if you don’t go about it the right way.
The very first step to answering that question is to lay out your current expenses, including your household budget and any other basic, daily living expenses you have. Once you have determined your household budget and other daily living expenses, the next important question should be…
“Where is the income going to come from?”
In order to retire safely and stay retired, I believe every retiree needs to consider the following 3 things:
- A Source of Income to Cover Expenses
This may seem obvious but you would be surprised at how many families I have worked with who didn’t account for the loss of some social security benefit after one person in the couple passes away. Or, the reduction in pension income if the person who the pension is tied to passes away. You will benefit greatly from a financial strategy that aims to create an income stream that you will not outlive no matter what, and one that can support your needs in retirement. This will take care of the basic expenses that you will encounter in retirement (i.e. house payments, utilities, insurance, etc.)
- An Emergency Fund
You will need to determine the right amount of capital needed to account for any unforeseeable emergencies in your future. The purpose of this surplus money is to be used in the event of an emergency such as medical expenses, natural disaster, car or appliance repairs, etc.
- A Strategy for Inflation
This may be the hardest part to prepare for, because inflation happens every single day…and we never know how much it will be year to year. This can make it difficult to determine the exact amount needed to prepare. However, this money is set aside to compensate for inflation over the period of your retirement. It can be beneficial to break down your basic expenses and account for each one that will be affected by inflation.
Once you have identified these things, then comes the next step of putting a strategy together to accomplish everything. Resources on that topic are throughout this website and also in my book, How to Turn a Lifetime of Savings into Income for Life which you can requested on the right hand side of this site.
As always, if you feel I can be of help on your journey please email or book a 25 minute phone session with me – a link to my online calendar/scheduler is also on the right hand side of this page. I will do my absolute best to help and if I can’t, I will try and point you in the right direction.