One of the most common dilemmas for people of this age is how to best fund your lifestyle once you have stopped work. The average age of people retiring from the workforce is currently around 63, according to US Census data. But over the next few decades this is forecast to rise considerably. This is down to a number of challenges facing savers currently a retirement age – or close to it.
A major difficulty is that the goalposts are often changing, making it impossible for savers to accurately plan. George Osborne, the Chancellor of UK Parliament, has indicated that increases in life expectancy will automatically trigger a rise in the state pension age, which is likely to rise to 70 within 50 years.
It sounds obvious but if you’re within a few years of retirement, getting your pensions and other savings in order should be your top priority. This may mean locating old company pensions and bonds held with banks and building societies you took out years ago, which can take a few weeks. Once you’ve worked out what you’ve got, decide when (roughly) you want to retire and the income you’ll need to live to the standard you’re expecting.
Draw up a budget of everything you spend now, and then do the same for your retired self. Think about expenses you won’t incur when you stop work, such as commuting costs or work clothes. Equally, consider that you might want to spend more on travel and other pursuits. Next, calculate all your potential sources of income in retirement.
If you find there’s a shortfall when you compare income with expenses, you have two options: accept a lower standard of living or take action. There are several options for this. If you retire later your retirement pot won’t have to last as long, and you may be able to defer your state pension, which means you get higher payments.
When it comes to planning and managing your assets during your retirement, it’s easy to overlook some of the common factors that can affect how much you’ll have available to spend. If you do not consider how your retirement income can be impacted by investment risk, inflation risk, catastrophic illness or long-term care, and taxes, you may not be able to enjoy the retirement you envision. Our team at Financial Consulting Group, Inc., has extensive experience with retirees in working through the many factors that impact your retirement income. We continuously monitor your assets and income flows as we strive to manage a successful income plan.
Sound retirement planning involves understanding these risks and how they can influence your available income in retirement. Visit our website to learn more: fcgno.com
The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material. There is no assurance any of the trends mentioned will continue or forecasts will occur. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of the team at FCG and not necessarily those of RJFS or Raymond James. Investing involves risk and you may incur a profit or loss regardless of strategy selected.