I met with someone last week who wanted to get ready to retire. He had worked for 35 years and wanted to know if he truly had enough money to make it happen. He even brought his wife to the meeting because, well, she really wanted to know too. This is a very common question that I get, and it's probably one of my favorites.
I wanted to walk you through what I shared with them in that meeting and how I helped them become 401k superheroes, because I think you might find value in this conversation too.
Before I could help this couple truly decide if they have enough money to retire, I needed them to answer this question. What is your retirement budget? Knowing how they plan to spend money in retirement and exactly what they'll need each and every month is absolutely key in figuring out how much they would need to fund a comfortable retirement.
It's very common for retirement budgets to look different than our budgets in our working years, which is why this exercise is so important. So here are three things I helped this couple go through in order to help them create their retirement budget.
First, we started by estimating their expected retirement expenses, including things like housing, health care, food and transportation, as well as all the fun stuff such as travel, hobbies and entertainment. Also, don't forget periodic big expenses like home repairs or auto purchases.
The next thing we did is determined their retirement income. You'll want to go through and estimate your expected income from sources such as social Security, pensions, rental income, side hustles and other investments. You can visit SSA.gov to get a personalized Social Security statement.
And then lastly, once we know the retirement expenses and income, we can create a budget that accounts for all of your expenses and ensure that you have enough income to cover them. We also want to account for inflation and any changes that you would expect in your expenses or income over time. And remember, it doesn't have to be fancy, but it does have to be realistic.
You may want to consult with a financial advisor to help you create a realistic retirement budget that meets your needs and goals. Additionally, you can use online retirement calculators or budgeting tools to help you with this process.
So what questions do you have? Give us a call or schedule a free consultation by clicking the link below. We're here to talk about anything from budgeting and saving to investments and financial planning. Reach out today to see how we can help you become a 401k superhero to your future self.
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