There is no single number that guarantees an adequate retirement. It depends on a number of factors, some of which can be controlled, others that cannot. Below are some factors to consider in gauging financial needs in retirement.
A. Living costs
A retirement plan requires an estimate of expenses for housing, food, clothing, travel, utilities and other day to day expenses. The best guideline for these expenses are current costs for these items.
Some planners use a percentage of current income level to estimate living expenses in retirement. Estimates of 70% to 80% of pre-retirement income are commonly used to project retirement expenses.
B. Charitable and beneficiary gifting objectives
Wishes to make charitable gifts either in life or upon death should be taken into consideration when calculating financial needs for retirement.
Lifetime charitable gifts will need to be built into a retirement cash flow plan. If an individual wishes to leave money to a charitable organization at death, then that gift will have an effect on what assets may be tapped to provide retirement income.
C. Medical costs
Projecting medical costs in retirement is difficult. As a person ages, medical costs increase. Factors to evaluate include available health insurance, the cost of premiums, prescription drug coverage and overall state of health.
- Long-term care needs - Expenses for long-term care as an individual ages should be considered as part of any sound retirement plan. A long stay in a nursing home can blow a large hole in an otherwise sound retirement plan. Long-term care insurance is a major expense that should be explored as part of the planning process. State and federal governments have tightened requirements for qualifying for Medicaid coverage of long-term expenses.
Straight-Line Returns Vs. Probability Analysis
RetirementWorkers who are only 10 years away from retirement need to do a number of things to ensure that a comfortable retirement can be achieved.
RetirementThese considerations will help you make a realistic and thorough retirement plan.
RetirementRetirement costs can be surprisingly high. Help minimize the shock of these future expenses by extensively planning and not making these five mistakes.
RetirementThink you are prepared to retire? These warning signs may indicate otherwise.
RetirementWhy are more and more people planning on working later into their golden years?
Financial AdvisorThe retirement landscape is changing and will certainly continue to evolve. Here's how to help clients best navigate planning for their post-work futures.
Financial AdvisorSure, you can never save too much for retirement, but just how much is enough?
RetirementHealthcare often is the highest cost during retirement. Here's how to plan for and possibly buck that trend.
RetirementRetiring at the age of 65 is quickly becoming a thing of the past. So, what is happening to make this change?
Financial AdvisorHealthcare costs in retirement are rising. Here are some options that you and your clients should consider to help them fund this part of retirement.