Regardless of whether you are planning for an early retirement or you are simply doing your best to try to retire at a reasonable age, you understandably want to ensure that all of your bases are covered. The last thing that any retiree wants is to run short on cash later in life. This is an unfortunate outcome that some individuals face, and it can create extreme hardship or result in you moving in with family members instead of living independently. While there are no guarantees, there are a few important steps that you can take to create an effective, intelligent financial plan for the future.
Prepare a Budget
Before you can determine how much money you may need in retirement, you need to understand what your expenses will be. As you approach retirement, you may be able to more accurately estimate your living expenses, healthcare costs and more. Therefore, plan to review and revise your retirement budget periodically so that it is as accurate as possible. Remember that it is always best to estimate on the higher side and to have more money than you may need rather than to deal with the possibility of running out of cash.
Understand the Impact of Inflation and Taxes
Inflation and taxes can complicate your retirement planning efforts. You may be inclined to ignore them for simplicity’s sake, but this can be detrimental to your security in the future. After all the cumulative effect of inflation year after year on your financial needs can be enormous. In addition, your tax rate in retirement may be 12 or 15 percent or much higher in some cases. A smart idea is to work with a financial planner who can properly estimate your retirement needs when taking these factors into account.
Focus on Future Income
Once you know how much money you will need to live comfortably in retirement, you can estimate your financial need. There are various ways to obtain income in retirement. A common method is to draw money from a retirement account. However, you can also use money from a business investment, a real estate investment, royalties, dividends and more. With enough passive income, you may not need to save as much money as you otherwise would need to in order to retire comfortably.
Harlow Wealth Management has been helping its clients prepare for a comfortable retirement for many years, and its financial team is available to meet with you soon. Preparing for your financial future is not a matter to take lightly. You need all of the help that you can get from a skilled, experienced professional, and you can find the support and assistance necessary through Harlow Wealth Management.