Numbers YOU Need To Know BEFORE Retirement || Retirement Income Planning
We all want to retire. We can see the retirement destination ahead of us on the calendar. We can taste the sweet drink of retirement as we lay in a beach chair instead of punching the time clock. But what about preparing for that eventual retirement. What are some numbers, especially retirement income numbers, that you need to know BEFORE you retire? Let’s dive right in!
Numbers YOU Need To Know BEFORE Retirement
What Is My Social Security Benefit at 62, 67, & 70
This is the best place to start when you are planning your retirement and retirement income. What is my social security benefit going to be. If you don’t know, you can easily find out by creating an account with ssa.gov. Why do you want to know your social security benefit payments? Because social security is the corner-stone to your retirement income strategy. Once we have a good understanding of how much we will receive from social security, then we can plan the rest of our retirement income based on our total retirement assets. Knowing your social security benefit is the #1 number you need to know BEFORE retiring.
Pension Start Dates & Survivors Benefits
For 85% of you reading this, you won’t have the option of a pension. Most pensions have been fazed out and 401k’s have replaced them. BUT if you do have a pension, you want to know when your pension will start and how much in retirement income you will receive from that pension. If your pension doesn’t pay out retirement income until you are 65 and you retire at 60, you’ll need to know this so you can make up the income using your retirement savings. ALSO, if you have a pension, you want to understand what are the survivors benefits to my spouse. If you pass away, does your spouse get your retirement income at how much. That is KEY!
What is my Health Insurance Premium & Health Care Expenses
This is a huge expense in retirement and this is a number you WANT to know before you retire. If you retire at 55, you are 10 years away from Medicare. What is your health insurance premium going to be for those 10 years? As you get older, health insurance gets more expensive and this is an expense that needs to be built into your retirement income plan.
How Long Will My Retirement Income Last
This might be the last number you need to know before heading into retirement but it carries equal importance with all the other retirement numbers. How long will my retirement income last? Would you plan a vacation without knowing how much you are going to spend? Then why are you going to plan your retirement, which could be 20-30 years of your life, without know how long your retirement savings is going to last. An easy way to do this is take the amount of money you need from your retirement savings and divide that into your total retirement savings. For example, if you need $40,000 annually from your retirement savings and you have $900,000 in total retirement investments, that retirement income percentage is 4.4%. Remember, each year there is inflation and market volatility, so that percentage will change. A good rule of thumb is to try and keep that percentage BELOW 4%. If not, you are at a greater risk of running out of retirement income and retirement savings.
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