There’s no time like the present to start thinking about your retirement budget — even if
retirement is still several years away. By looking ahead, you’ll be able to see if the money
you’ve saved will be adequate to meet your retirement needs.
What Do You Want?
You probably have two general goals for your retirement savings. Your first goal is to
have enough money to cover your basic living expenses: rent or mortgage, food, utilities,
taxes, transportation, insurance, and so on. Your second goal is to have enough to pay for
the extra things you’d like to do during retirement: travel, pursue hobbies, spend time
with family, relocate, or any other plans you’ve dreamed about.
You probably have a good idea of how much your basic expenses will be, but what about
the extras? Think about how much they will cost. If it’s more than you think you’ll be
able to afford, you should consider increasing your retirement plan contribution while
you’re still working.
Here’s to Your Health!
You’re probably covered by your employer’s plan right now, but what about after you
retire? Health-care coverage can take a big chunk out of your retirement income.
Medicare provides only basic coverage — and you have to pay for it. Unless your
employer offers retiree health insurance, you’ll probably want to buy a supplemental
policy as well.
Make a Practice Budget
Your financial professional can assist you with designing a spending plan. First, write
down all the expenses — basic and extra — that you expect to have in retirement. Then,
estimate your retirement income from all sources — pensions, employer retirement plans,
individual retirement accounts, Social Security, etc. Will you have enough income? If
not, start thinking of ways to increase it. Contributing more to your plan, continuing to
work for a few additional years, or getting a part-time job in retirement are possibilities to