Will You Have Enough Income in Retirement?
Conventional wisdom says you should plan to generate 80% of your working income in retirement, but the truth is there isn’t one specific number that’s right for everyone. Income needs in retirement are unique to each individual — so only you can really say how much income you’ll need. We can help you ask the right questions to arrive at the number that makes sense for you.
Six Essential Questions to Ask Yourself
If answered honestly and accurately, these six essential questions can help you plan for your retirement income:
No. 1: How Much Do You Spend Right Now?
A lot of people think they know what they’re spending every month, but when they go through a process of saving their receipts and recording their expenses, they’re surprised at what they learn.
For at least three months, keep track of all your spending. Note necessary costs like groceries, as well as gifts, eating out and savings. Record everything. It’s important to know not only what you spend, but what you spend it on.
No. 2: How Will Your Spending change in Retirement?
Do you dream of traveling? Plan to move out of state?
While some costs, like traveling to and from work, should decrease, other factors may bring additional expenses. Consider the costs of a cross-country trip, or the possibility of medical needs or illnesses that necessitate long-term care. It’s important to be realistic about your retirement goals and lifestyle needs when calculating retirement income. The financial professionals at our firm can help make sure you don’t overlook something that could affect your lifestyle in retirement.
No. 3: Will Family Issues Affect Your Spending?
While we hope our children will be grown, gainfully employed and pursuing their dreams when we retire, that may not be your reality. If you have an adult child or a grandchild to support, it may change the way you plan for retirement income. Also, it’s important to consider the complexities that may arise if your spouse was to die, including lost income and tax implications. Working with a tax advisor, we can help you prepare for these types of things.
No. 4: Will Your Taxes Be Higher or Lower in Retirement?
Predicting tax policy is a tricky business, but there are some things for which you can prepare. For instance, if you have a lot of assets in pre-tax retirement accounts, any distributions from those accounts could push you into a higher tax bracket. Or, if you aren’t withdrawing from those accounts appropriately, you may incur penalties. Working with a financial professional from our team and a tax advisor can help you prepare for any future tax changes and avoid unnecessary taxes or penalties.
No. 5: How Could Inflation Impact Your Retirement Assets?
We can’t predict the future, but it seems reasonable to prepare for increases in inflation over the course of retirement. It doesn’t take long for even small changes in inflation to add up. This should be factored into your retirement income strategy, and we can help you identify strategies to address the potential impacts of inflation on your retirement assets.
No. 6: How Long Will You Live?
If we knew the answer to this question, planning for retirement income would be much easier. Life expectancies will vary, but in general, people are living longer than ever before. That means your retirement could last much longer than your parents’ or grandparents’ retirements. The longer you live, the more factors like health care costs and inflation are likely to impact your retirement income. We can help you approximate your life expectancy and help you prepare for the possibility of a long life and long retirement.
This content is provided for informational purposes only and is not intended to serve as the basis for financial decisions. We are an independent financial services firm helping individuals create retirement strategies using a variety of investment and insurance products to custom suit their needs and objectives.
Investing involves risk, including the potential loss of principal. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
Our firm is not permitted to offer tax or legal advice. Individuals are encouraged to consult with a qualified professional before making any decisions about their personal situation.
Securities offered only by duly registered individuals through Madison Avenue Securities, LLC (MAS), member FINRA/SIPC. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM), a Registered Investment Adviser. MAS and E.A. Buck Financial Services are not affiliated entities. AEWM and E.A. Buck Financial Services are not affiliated entities. 00821302 – 2/21
Content prepared by Advisors Excel (415297)
E.A. Buck Financial Services,
55 Merchant Street, Ste. 2100
Honolulu HI 96813,
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