Retirement Planning Frequently Asked Questions
Retirement planning is on the minds of many. But you may not be sure when to start. In this article, we will answer 6 frequently asked retirement planning questions.
How Much Money Do I Need?
The amount of money you need to have accessible for retirement varies on many different factors. These include, but are not limited to:
- Current salary
- Future salary increases
- Rate of inflation
- Desired lifestyle (housing, travel, entertainment, and health care costs)
You may need to meet with a qualified retirement planner to accurately calculate the amount you need for retirement.
Where Will My Retirement Income Come From?
There are many sources for retirement income. The first category is steady monthly income streams. These are income sources that pay the same amount to you every month. This would include Social Security Benefits, pension plans, and annuities. The second source is funds you have generated over time and can draw from as needed. These would include 401k and 403b plans, Traditional and Roth IRSs, investments, savings accounts, and the cash value of life insurance.
How Can I Make Sure I Do Not Outlive My Savings?
One of the best ways you can avoid outliving your savings is through a guaranteed income stream. An easy way to do this is by purchasing an annuity. You also want to make sure you factor in inflation when creating your budget. This will help prevent your spending power from coming up short.
When Should I Start Saving?
Saving should begin as soon as possible. The sooner you start saving, the more time it allows your savings to grow through the power of interest.
What are the Biggest Financial Risks I Will Face in Retirement?
There are a few risks you should be on the lookout for. First, you always want to make sure your retirement plan factors in inflation. Failing to do so could leave you coming up short. Second, is market volatility. Keep in mind that the closer you get to retirement, the less risks you should take with your nest egg. You want to make sure you will have time to recover from any dips in the market. Third, keep in mind increased health care costs. As you age you will need to factor in the additional health care you will need. Lastly, is the death of your spouse. Depending on your situation, this could greatly decrease your income. Preplanning can help to mitigate these risks.
Who Can Help Me Plan?
There are many people out there with no credentials that market themselves as retirement planning specialists. You will want to make sure you sidestep these and find a professional with respected credentials. This would include a Certified Financial Planner. CFPs are held to a fiduciary ethical standard. They also are subject to rigorous testing and continuing education retirements. This keeps them up to date with the best possible industry practices. A CFP can help you create a financial plan that helps you set yourself up for the best retirement possible.
Retirement Planning Success
Retirement planning can be a productive and successful process. To ensure the best possible outcome, meet with a qualified financial planning who can help you with your plan.
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