Do you know how much money you can safely spend in retirement?
If the answer is no…
Can you maintain your current spending in retirement?
Maintaining your current spending in retirement depends on careful financial planning and a realistic assessment of your future income sources and expenses. You'll need to evaluate whether your savings, investments, and any other income streams, such as pensions or Social Security, can support your lifestyle without depleting your funds too quickly. This involves considering factors like inflation, healthcare costs, and potential changes in spending patterns as you age.
Did you know the average 65-year-old couple retiring this year can expect to spend an average of $315,000 on healthcare expenses in retirement?
(source: Fidelity Investments)
Want to know how much will you be able to spend in retirement?
Find out now by scheduling a complimentary consultation with our team.
When you retire, do you know
what your annual tax bill will be?
Understanding the tax implications of your investments is crucial for your retirement planning. Different types of investments are taxed in various ways, which can significantly impact your total savings. For example, some investments might be taxed as regular income, while others may benefit from lower capital gains rates. Additionally, tax policies can change over time, potentially affecting how much you owe in the future.
By comprehending how your investments will be taxed, you can better estimate your annual tax bill and make informed decisions to maximize your savings and minimize tax liabilities in retirement. This foresight can help ensure a more financially secure and stress-free retirement.
Investment Tax Buckets
Will Rising Taxes Derail Your Retirement?
Assess Your Risk Now!
Are you familiar with 4% withdrawal strategy?
The 4% withdrawal rule is a financial guideline for retirees to determine a sustainable annual withdrawal rate from their retirement savings. According to this rule, retirees can withdraw 4% of their investment portfolio in the first year of retirement, and then adjust the amount annually for inflation.
The goal is to provide a steady income stream while preserving the portfolio's longevity over a 30-year retirement period. This rule is based on historical data and assumes a balanced portfolio of stocks and bonds, though individual circumstances and market conditions may affect its applicability.
Why might the 4% rule be outdated?
What are the assumed future returns?
This withdrawal rule may be overly optimistic if future market returns are lower than historical averages.
How long will you actually live?
As life expectancies increase, a 30-year time horizon used in the rule may be insufficient for today's retirees.
How much will you be spending?
Rising inflation could erode purchasing power, making it challenging for investments to sustain spending.
Pick a Card...Any Card
Pick a Card...Any Card
Let’s play a game…
Image each card is an annual portfolio return
5%, 30%, -20%, 13%, -7%, 8%
• Pick a card up one at a time
• Now, what happens if you get a negative first?
Draw a card, and you might uncover a fantastic return, or you could flip over a devastating loss. For instance, a balanced portfolio might face a -20% return in the first year of retirement, much like what happened in 2008. How would this rollercoaster of returns impact your retirement success?
Now Let’s Look at Spending
What are the key differences between discretionary and non-discretionary expenses?
Discretionary expenses are non-essential costs that individuals choose to incur, such as dining out, entertainment, vacations, and luxury purchases. These expenses are typically flexible and can be adjusted based on a person's financial situation or changing priorities.
Non-discretionary expenses are essential costs that are necessary for basic living, including housing, utilities, groceries, and healthcare. These expenses are typically fixed and must be paid regardless of financial circumstances, as they cover fundamental needs.
What if you could guarantee that your non-discretionary expenses would be covered in retirement?
If your non-discretionary expenses can be fully covered in retirement, it would provide a secure foundation for your financial stability, ensuring that essential needs like housing, food, and healthcare are met. This allows you to use your remaining funds for discretionary spending, enhancing your quality of life and providing greater financial flexibility.