How to Meet Your Income Needs in Retirement

Let’s talk about how to meet your income needs in retirement. Now the first thing that we have to do when we do this is what needs do you have? It’s oftentimes, maybe nine out of 10 folks that come in for the first time and want to talk about retirement planning with us, don’t know what they need in retirement. You know simply, a lot of times, what is the budget if you will? I seem to find that most people don’t per se, don’t live life on a budget. And that’s great. You know maybe you have enough income and you’re fortunate enough to be having savings and all that sort of stuff. So you haven’t per se had to live on a budget. Probably internally you kind of have one. But you’re not saying you’re not writing it out or you’re not divvying it up per se every month or paycheck or whatever it may be. But we need to kind of consider this when we’re heading into retirement. What do you think you’re going to need to live on to pay the bills and keep the lights on do the things you want to do in retirement. So once we have that number in place, that budgetary number for expenses, how are we going to get there? Are we going to have enough to get to where we want to be? First, what do we know is going to come in? Think like pensions, Social Securities. Maybe you’re fortunate enough to have like royalties off an old oil situation, rents, some maybe annuities can be kind of a guaranteed source, stuff like that. So what do we know is going to come in and then was is our shortfall? What is the difference between what we know and what do we need? And then that’s when we have to look at our portfolio, our retirement savings, whether that’s a 401K, IRAs or any of those different savings vehicles. Now what is that amount we have there and what can that produce as income? Now then, so we have to consider withdrawal rates and you know do you want to leave money behind and are there other bigger purchases coming along that we have plan for? So at the end of the day, how are we going to meet the income needs in retirement? Step one, know what the income you need is. Two, what do you know is going to come in and finally three, what can that portfolio produce comfortable depending upon your situation that you want to have? Oftentimes, we see people jumping the gun a little bit on this step in their life where you know they come in, hey, I retired last week. What do I do? Have these conversations in advance. Have something, this is where set goals and want to work towards so that you can feel confident heading into retirement that you have a plan and that you’re not going to have a situation where you outlive your money. You know people’s number one fear when they were polled a few years ago, was actually running out of money and not dying. So make sure you have a situation to do that. You may think you have enough, but when you start drawing from that and you have to plan you know maybe 20, 30 years or more that you’re retirement may exist. Saving your savings last that long so you can do the things you want to do. Also, final thing I’ll say on this is oftentimes people underestimate their spending in retirement. You now have all this time and you have all these dreams and maybe it’s travel or grandkids. Make sure you add those things into your budget so you can plan to retire well.