Back in the day, retirement was pretty cut and dry. People would work for one company for thirty years, retire on that company’s pension, and they would put their money in bonds to get them through retirement. Times have changed. People used to retire and spend less than a decade in retirement. These days it’s not uncommon to see retirements lasting thirty plus years. And this seems to be the biggest concern for retirees and soon to be retirees… that they will outlive their money.
Don’t get me wrong, having a longer life expectancy is a good thing, but it is going to cost a lot more. For starters, people need to begin saving much more than they have in the past and be able to take that savings and turn it into a lifetime income stream. It really is pretty simple and that it is all about how much one saves and how much one spends once he/she retires.
One of the biggest keys to accomplishing this is to stick to a budget during retirement because you are living on a fixed amount of money and you are no longer receiving that constant paycheck. Another key is how long people work until they retire. Delaying retirement just two or three years can mean a great deal as far as the amount saved, but it can also make one much more confident that their money will last them through retirement.
Don’t forget about inflation. If inflation were to remain at a constant three percent in your retirement, then it would basically double everything you purchase in 23 years. What takes $40,000 to keep up your current lifestyle right now will take about $80,000 to keep up in 23 years. If your money is not growing, then you run the risk of running out of money in retirement.
People need to expect that they are going to have to make adjustments in retirement. Make sure you have a plan and look for guidance. I’m a big sports fan, so I like to equate retirement and all that goes with it to the biggest game of my life. Every big sports team I follow and every big athlete I root for has a coach. That athlete may be the best that has ever played the game, but they still have a coach.
My point is that just because you have reached retirement or think you have it all figured out does not mean that your situation couldn’t benefit from a second look. We recommend you consult your financial advisor or tax professional in your area. If you don’t have one, we would be happy to recommend one in your local area. Give us a call at Retirement Think Tank at (888) 282-3653 or email us at firstname.lastname@example.org. We would welcome the opportunity to speak with you!