fbpx

Retirement planning isn’t for sissies

Written by V. Raymond Ferrara, CFP®

On May 21, 2021

The process of actually planning to retire is not easy, but going into retirement with no formal written plan or quasi-plan makes the golden years a lot more complicated and unpredictable.  It can all be a bit overwhelming, both financially and emotionally. 

For 40-50 years, you have worked, earning a paycheck, a bonus (hopefully) each year, saved, invested, etc., and then the paycheck and the bonus stop one day.  It is a pretty uncomfortable feeling.  Maybe you are lucky enough to have a traditional pension, but then you have to decide the best way to take the pension.  You probably have a Social Security benefit, but do you take it at age 62 (the earliest), Full Retirement Age (FRA) which is between 66 and 67, or do you wait until age 70 (maximum)?  What about health care – use COBRA or ObamaCare if under age 65, or switch to Medicare at age 65?

How much income do you need to cover expenses?  Most people severely underestimate how much they spend.  Break it down into fixed (must have) expenses and variable (like to have) expenses.  Once you subtract out your fixed (pension, Social Security, annuities -if any) income, how much more income do you need?  How much do you have in savings and investments?  What return are you projecting?  If the amount you need to withdraw is greater than 4-5% of your investments, you will likely have a problem down the road.

How could you have a problem if the amount you are projecting to earn is greater than the amount you will withdraw?  First, what if the market is down in bear territory and your portfolio declines 20% or more in a given year, or perhaps over several years?  How will you recover the lost value?  Secondly, you will need to make adjustments for inflation over the 20-30 years in retirement.  Either one, let alone both, will have a dramatic effect over that time period.

So, let’s begin with the end in mind – a happy, stressless retirement financially and emotionally.  The best way to do that is with a written plan.  Take advantage of our one-hour complimentary consultation to learn more about creating a retirement plan.  You are retiring for the first time; we have helped thousands achieve the retirement they always wanted.

You May Also Like…

When is the right time to start saving for retirement?

When is the right time to start saving for retirement?

The best time to start saving for retirement is yesterday; the second best time is today. The worst time is putting it off till tomorrow. If you are young and wondering when to save for retirement, it might seem so far away that putting money away now seems premature....

Five things need to know about retirement planning in Tampa, FL

Five things need to know about retirement planning in Tampa, FL

Whether you live in Florida now or elsewhere, you might be thinking of retiring in Tampa. And why would you not? Tampa is in a beautiful part of the state. It is close to the beach, and there is plenty for you to experience and enjoy.  Hopefully, you have been...

How should I save for my military retirement plan?

How should I save for my military retirement plan?

Retirement planning as a U.S. armed forces member is slightly different than for those in the civilian sector. This is because armed forces members are eligible to retire after 20 years of service, which means they can retire much younger than the average worker in...

0 Comments