Is a Roth Conversion right for you? There are many different financial firms advertising this strategy right now, but it can be difficult to know this is truly something that will work well with your plan. We dive into how a conversion works, how taxes are paid, and the long-term effects of t…Listen Now
Your Retirement Plan
Retirement planning is a complex puzzle of both personal and financial goals, each of which has an impact upon the other.
When retirement is imminent, you have to make a lot of decisions. One of the most important of these decisions is what you will do with your time. While this may seem obvious, it is a key element to a fulfilling retirement. An integral part of your retirement is what you will do everyday; how and where will you spend your time. Many people actually create a written plan for how they will spend their time while retired; while such a formal approach is certainly not necessary, in many respects it’s not a bad idea.
How and where you will spend your time during retirement is directly related to the income you need for your retirement plan, and how you will create your “retirement paycheck”.
This is the area of a retirement plan that gets the most attention, and for most people, it is the greatest concern. Retirement is certainly not all about money, but ensuring that you have enough money for a retirement that may last twenty years or more, in an unpredictable economic environment, is a significant concern. Matt Nelson addresses this directly in many of his radio shows. To listen to Matt, tune in on Income For Life Radio for the latest on retirement options from fixed to variable annuities.
The challenge of retirement planning is creating an income from your retirement savings in such a way as to ensure that your money lasts as long as you do.
From a financial standpoint, this is commonly called “longevity risk”, and it speaks to the issue of how long your money has to last. Statistically, we know that a male who reaches age 65 has a 46% chance of reaching age 85, and a 25% chance of celebrating his 90th birthday; for women who attain age 65, there is a 56% chance of celebrating their 85th birthday, and a 35% chance of making it to age 90 (Society of Actuaries, FP-2000). While statistics are useful, we must beware of them as well, because the bottom line is that we really don’t know how long we will live (at least within reason), so when it comes to retirement plans it is prudent to be prepared for the long haul.
“How do I do this?” is the question on the mind of many people who are about to retire, or have recently retired.
How do you make your money last as long as you will last in the face of uncertain and unpredictable economic conditions over many years, perhaps decades? Whether you are average or wealthy, there are common challenges for everybody. Some people are concerned about having enough retirement income to maintain their basic needs. Many retirees are chiefly worried about having sufficient income for their retirement dreams of travel and adventure, whereas others just want to be sure that they are comfortable and can still leave a legacy to their family. To put it another way, some are worried about the basics while others are worried about being able to redecorate their European vacation villa every few years, but most people are somewhere between these two extremes. All concerns and goals are legitimate and are all relative to the retirement lifestyle that they reasonably expect or hope to achieve given the retirement savings that they have accumulated.