What do YOU Want Your
Retirement to Look Like?
Imagine yourself at some future date, waking up on the
first morning of your retirement. Let's
see what that's like. Where are you living? Perhaps you're living in the house
that you were living in pre-retirement. Perhaps you're living a mile from the
beach, so close that you can smell the salt in the air. Or perhaps you're living
in
Mexico
.
Wherever you're living, you need money to live on. You also need money for all
those extras that you take for granted: vacations, gifts, and entertainment –
dinners out, golf days. And, wherever you're living, you need money to keep up
your home, to pay people to paint, repair and maintain your home and property.
There are a hundred and one expenses which you're covering now, which you will
have to find money to cover in retirement.
Your first step in planning your retirement is to work out how much money you
will need to cover all your living and other expenses. Of course, you will need
to allow for inflation, but if you want to live much the same life that you're
living now, that money will need to come
from somewhere. All of it.
Where are you now? Gather all the information you need and use our handy
form to assess where you are
It’s incredible how many people blindly believe that a
certain amount will be enough for them to retire on without any real
calculations or numerical analysis behind these beliefs and assumptions.
As with any short or long-term quest, prospective retirees need to
determine a realistic goal based upon an exact analysis of where they’re
trying to go. Just as we can’t expect to drive to a destination without some
logical set of road directions, we can’t expect to steer our way to a
successful retirement without understanding the financial highways that will get
us there.
Do you know how much money you spend each
year? Do you know how much money you NEED to spend each year? Have you ever
taken the time to write out how much money you’ll need per year for each
common spending category? (Such as, housing
payments, utilities, food, gas, and so on). Doing so not only helps you to begin
planning by realistically accounting for each dollar, it also helps you assess
your financial needs to the point where you can administratively determine which
areas can be optimized and decreased.
If, for example, you determine that you require $65,340 a year to live
comfortably but that you can only squeeze $60,210 a year out of retirement. When
you have a breakdown such as the one below you can look at each category to
determine where you can shave off $100 here and perhaps even $500 there.
The importance of understanding:
a) how much you
truly (and as close to exactly as possible) need per year and
b) how that figure
is determined cannot be understated.
In many ways, it’s important as it is for you to know, to understand, and to
plan to live by this information as it is for large corporations to assess their
own budgets and to use them in making forecasts and key financial decisions.
That said, take a few minutes and do it! Filling
in the information below might yield some surprising results.
Fill in the form
Enter a realistic annual cost for each category in the form
below. Avoid over-guessing...DO NOT RUSH... If you’re not sure how much you
spend on a particular item each year, take the time to carefully look through
your records (checkbooks and bank statements) and make a fair and accurate
determination.
Begin by allowing yourself generous expenditures. That is,
over-spend a bit on entertainment, phone, estimating a greater amount than you
think you will need. Plan to live as comfortably as you can imagine--and only
later on, if the total cost of living works out to be high, consider trimming
down some inflated areas.
Print out the form and enter your information:
|
Mortgage & prop. Tax payments (plus any
community dues):
|
$
|
|
House cleaning services
|
$
|
|
Gas bills
|
$
|
|
Electric bills
|
$
|
|
Water bills
|
$
|
|
Home phone bill
|
$
|
|
Cell phone bill
|
$
|
|
Cable & Internet bill
|
$
|
|
Groceries
|
$
|
|
Gasoline for two cars
|
$
|
|
Car insurance
|
$
|
|
Medical Insurance
|
$
|
|
Other insurances (homeowner’s etc)
|
$
|
|
Gifts to others
|
$
|
|
Accountant
|
$
|
|
Medical out-of-pocket
|
$
|
|
Unexpected expenses (repairs around the house,
car, misc.)
|
$
|
|
New clothing/jewelry for people & beauty
(hair, etc;)
|
$
|
|
Local
entertainment (figure out how
much it would cost per week to have fun locally i.e. movies, theater,
dining out etc;)
|
$
|
|
Distance Travel -- (actual vacation trips)
|
$
|
|
OTHER items unique to YOUR LIFESTYLE
|
$
|
|
EST.
AMOUNT NEEDED PER YEAR TO ENJOY LIFE
|
$
|
The results: surprise? Shock?
Whatever the results, now you know what funds you will need
in retirement to live the way you're living now, and you can work with that.
If the results shocked you, don't despair, our next chapter
will help you to get ready for retirement so you can both save money and make
more money, painlessly.
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