The Kind of Retirement You Make

Coming to terms with what your retirement income and expense is essential to plan your retirement life. For a quick approach you can estimate your income and expenses under your present circumstance. If you are not happy with the results, see what steps you can take to fashion a better retirement. Here is the process:

Determine your Income:

Your base retirement income is made up of three parts: your pension income, your social security income, and the income your savings will generate. 

Check with your company for your pension income estimate. Estimate your social security income using www.ssa.gov.  Project your total savings five years hence, then take 5% of that estimate what income it will give you. Now total these for your annual retirement income.

As a hypothetical example, Bill’s pension gives $12,000, his social security--$13,000 and his savings--$12,500 (5% of $250,000) for an estimated total retirement income of $37,000.

Determine your Expenses:

Add the total of your annual expenses as you incur them now.  Housing, utilities, transportation, clothing and taxes (10% of income) are your necessary living expenses. Now add optional annual expenses for entertainment and travel. Total them.

Compare your total income and expenses. You can see now where you come up short or not.

 Bill has necessary annual expenses that are $5,000 (housing) $4,200 (utilities) $5,600 (transportation) and $3,700 (taxes) for a total necessary living expense of $18,500.  He estimates his entertainment expenses at $16,000 (about $40/day).  He would like to see how much would be available for travel.

For Bill, his total income is $37,000 and his necessary living expenses plus entertainment expenses are $34,500. This leaves about $2,500 for travel.

With this estimate, you can see how tight or easy retirement will be for you. If your retirement circumstance is unsatisfactory, then you can choose to enhance your retirement income by:

• Saving drastically more for the next few years to enhance your assets.
• Work part-time during some of your retirement.

And/or you can diminish your retirement expense by

• Deciding what are unnecessary expenses.
• Move to where living expenses are less.

Determining how to modify your retirement can be just a matter of calculating how much more you can reasonably save for retirement; or it may put you on a track to redesign your retired life into a new life style in a whole new place that suits your budget and your happiness.

Bill found that selling his house and buying another in a less expensive county enhanced his savings and drastically reduced his expenses. What about you?

Give us a call or drop us an email so we can help you choose a savings approach appropriate for you.