Retirement, while normally highly anticipated, can still be stressful. There are many logistics to figure out as you start to wind down. Some of these may include relocating, setting a retirement budget, and the impact medical or other unexpected expenses might have. Perhaps one of the biggest questions is what does my new “paycheck” look like?
It can be daunting to realize that you will no longer be receiving income from your employer or your business. According to the most current information available to us, we expect that those individuals retiring in the next ten to fifteen years will still receive their anticipated social security. However, social security covers only a portion of the amount of money you will likely need to maintain your expected retirement standard of living.
While some lucky individuals will have a defined benefit employer pension as the mainstay of their retirement income, most people will have to supplement their social security benefits with their own savings, especially 401(k)/403(b) and IRA accounts. Even those with pensions will probably end up supplementing with qualified plans in some fashion, especially if their social security benefits are reduced due to their pension. As a result, you will need to determine a sustainable withdrawal rate from your retirement savings accounts. This rate determines how much you can withdraw each year without depleting your retirement savings under a probability analysis that takes into account your longevity and asset allocation. After determining that sustainable withdrawal rate, you can set up a monthly or annual distribution, thereby turning it into a paycheck.
As you approach this exciting transition, professional advice is key to these aspects of retirement planning. With one of the highest concentrations of financial professionals in the state, we specialize in creating retirement plans and in implementing retirement cash flow strategies. Our two CERTIFIED FINANCIAL PLANNER™ professionals on staff are prepared to help you with determining the sustainable withdrawal rate for your portfolio, how it should be allocated, and which “buckets” of money you will use to generate income. It would be our true pleasure to help create a stress-free retirement for you!
Associate Financial Planner