Transitioning to retirementSubmitted by Agrawal Associates on July 28th, 2017
July 31, 2017
How much money do you think you’ll need to live a comfortable retirement?
One “rule” often circulated is that you’ll need 70 to 80 per cent of your pre-retirement income to maintain your standard of living. However, that’s a very blanket statement and assumes there’s a one-size-fits-all approach to retirement income. Instead, let’s look at a more personalized approach to retirement planning.
Assessing your lifestyle, both before and after retirement, is an important part of the process as you determine how much income you’ll need to maintain the same lifestyle. Try making a before/after list of expenses.
- Networking events with colleagues
- Professional development opportunities
- Maintaining a professional wardrobe
- Increased health care costs
- Additional travel expenses
- Purchasing/maintaining a recreational vehicle
This exercise, along with planning meetings with your advisor, can help you determine what percentage point you really should be looking at. It’s also important to consider planning for costs that are associated with aging, and look at how much you can specifically save for retirement while you’re still working.
One concept many financial planners apply to retirement income planning is “consumption smoothing.” This approach looks at your current style of spending and your vision for a similar lifestyle in retirement.
The concept attempts to “smooth” clients’ consumption while they are working. This is so there’s less of a discernable impact to their lifestyle and standard of living through the transition to retirement.
By gradually preparing for retirement by moderating spending over time, it not only makes the transition easier, it can also result in increased savings at the same time.
We’ve all dreamed of what our retirement will look like. The more advance planning you do with your advisor, the more likely you are to live your ideal retirement lifestyle.
Need a bit more insight? Join us on Wednesday, Aug. 16 for a complimentary retirement information session. Register today!
- Agrawal Associates