Will I have enough?
Retirement Planning Tools
You might be wondering, “will I have enough to retire?” Costs for medical care are on the rise. Household expenses have gone up as well. Of course, even the basics – like food and housing – those have increased in cost as well. So, how do you know if you’ll have enough? Let’s talk about some retirement planning tools and strategies that can help.
It’s a good idea to consider inflation costs when planning for retirement. Inflation causes your dollar to be worth less in the future. In other words, it costs more to buy the same items years down the road versus now.
A basic inflation rate is about 2% annually. Most people agree that between 2%-3% is a fair average rate for inflation. If you want to be more accurate, you can also use an inflation calculator, just one of many available retirement planning tools.
Doing The Math
Here’s an example. If you need $40,000 of income each year, and inflation was 2%, then next year you need an extra $800 just to cover the same expenses. In 5 years, that number jumps to $44,000. Then, at 10 years, you’d need almost $50,000 to buy the same stuff you bought 10 years earlier for $10k less. One of the important aspects to retirement planning is to consider how much you’ll need in income now AND in the future. At Orfin & Associates, we offer various options, including optional benefits on fixed indexed annuity plans, that may help. Indeed, we aim to help you keep a lifetime of income that provides for you even as inflation impacts your money.
Retirement Planning Tools for Budgeting
Another important piece of the retirement income puzzle: expenses. In our work with clients, we review your anticipated expenses, as well as your current cost of living. Some people feel that they will be ok living on less. But, it is important to actual budget and document exactly how much money you’ll need.
There are some online budget calculators that can help you layout your expenses and income needs. Mostly, the aim is to make sure you have enough income to support your lifestyle and living costs in retirement.
Also, make sure you include any “extra’s” such as vacations, dining out, gift or charitable giving, etc. In addition, it is a good idea to pad your income with a surplus that can be used as discretionary income or used to save towards larger purchases. That way, if an emergency comes up, you have access to your money. Armed with this information, you can look at guaranteed income plans such as fixed index annuities (FIAs) as a possible retirement option.
Safety Could Be Your Best Tool
It seems that secure retirement income options are becoming less available. Pensions have all but gone away in most organizations. In fact, most government employees need to put more into their pensions now than before. Yet, the payout when they retire seems to hardly be enough. When retirement hits, some people are not satisfied with the amount they receive. CD’s and traditional savings accounts have some protection. But, the FDIC only covers up to $250,000 of your money. In addition, the interest rate you receive may be less than desirable.
The stock market is inherently risky. There are, of course, ups and downs in the market. Therefore, having some of your money in a safe, secure choice, such as a fixed index annuity, could be something to consider. Keeping your principal safe from loss is a tool many retirees find appealing.
Keeping Your Wealth Protected
For at least some of your assets, it is a good idea to review ways to secure the principal. If you keep some money safe from market loss, you’ll have some wealth that is secure. Because there are certain annuity options that offer protection from market loss, many retirees find these products useful tools in their planning.
At Orfin & Associates, we want you to have confidence in your retirement. In addition, we believe that protecting your assets from market loss is one of the best tools available. You deserve to know your choices and make a plan that works for you.