Everyone dreams of retirement, but what does retirement really mean? Retirement is freedom to spend your time and your money as you please. There are 3 key numbers that may help determine and shape what your retirement will look like. By taking these major influences into consideration, you can turn your retirement dream into a reality.
1. How Much Will You Need to Maintain Your Standard of Living?
An important retirement question is, “How much you will withdraw from your investment portfolio annually?” This number will have a significant impact on your retirement plan since it determines whether your strategy is sustainable. If you withdraw too much, you may run out of money. If you withdraw too little, you may not be able to live the way you envisioned.
At Financial Consulting Group, our financial planners will ask questions to arrive as the customized number that is designed to be right for you. Our questions include: When do you plan to retire? What kind of lifestyle do you envision living? Are there specific things you would like to have money for? This number should be reviewed annually with your advisor to accommodate personal changes, fluctuating economic conditions, tax changes and inheritance laws. We have the experience to thoughtfully design a plan with your circumstances in mind, helping you develop a long-term financial strategy for your individual needs.
2. What Percentage of Your Retirement Income Will Come From Your Investment Portfolio?
The amount of income that comes from your investments is called your reliance rate. Your withdrawal rate determines your retirement plan’s sustainability while your reliance rate measures the sensitivity of your strategy. The higher your reliance rate, the more sensitive your portfolio will be to market fluctuations. If you rely on your portfolio for the majority of your income, you can consider these questions to help balance your sensitivity level: Can you be flexible with your spending or spend less when the market declines? Do you have any other outside sources that would help increase your income?
3. When Will You Begin to Take Social Security?
Social Security benefits are an invaluable asset in your retirement portfolio. The age you begin to receive benefits can affect both the amount you receive as well as your spouse’s potential survivor benefits. The longer you wait to receive Social Security benefits, the higher the amount will be. Unlike retirement investments, these benefits are not affected by market performance.
Financial Consulting Group, Inc. is committed to providing its clients with an independent financial advisor who can help you answer these questions and strategically plan for the retirement you have always envisioned. Retirement can be a very emotional decision and our advisors at Financial Consulting Group want to help. We can provide you with objective advice on your financial outlook before you make any decisions about whether to return to work. We can help you calculate all your sources of income, keep an eye on your investments, advise you on a tax strategy and ensure that you have a solid plan that includes enjoying your retirement to its fullest. Raymond James does not provide tax or legal services. Please discuss these matters with the appropriate professional.