Planning for Retirement
Cindy Diccianni, Financial Advisor
have many different financial goals, but one
they share in common is to achieve financial
independence. I define that as the time when
we conclude that our annual expenses can be
covered for the rest of our lives without working
any longer. Accurately calculating your expenses
for a 25 to 40 year period is a difficult task.
Another daunting task is accurately evaluating
your sources of retirement income.
determine future expenses, you need to answer
the following questions:
Much Will It Cost To Live?
The best way to design a retirement budget is
to have two types of retirement budgets. The
first is an actual expense budget with all needed
expenses. The second includes a dream list of
items you would buy if the money were money.
expenses are approximately 75% of normal non-retired
living expenses. Usually, there is no mortgage
on your home. Numerous senior discounts are
also available. However, most financial advisors
know that this estimate is not always realistic.
are three basic stages of retirement. The first
is the active phase when most people travel
and do all the things they worked most of their
lives to be able to do; this is usually the
most expensive phase. The second phase is usually
less expensive; this is the time when retirees
are usually still active but not as much as
in the first phase. The third phase is more
expensive, with increasing health care costs.
Long Will We Live?
Longevity can be predicted to some degree by
looking at your family's health history; then
comparing your lifestyle with other family members
to determined if you are in better or worse
whether we experience a quick death or a long
and lingering illness before death will affect
our financial needs.
the age assumption is 100, with some believing
that this is a conservative estimate. To address
the possibility of excessive medical needs or
long-term care facility requirements, we strongly
recommend that people buy long-term care insurance.
must also consider inflationary factors. No
matter what your monthly budget may be when
you begin your retirement, the current inflationary
rate of 4-5 % needs to be factored into the
Others, After You Retire
Most retirees can cover their own expenses fairly
easily with careful planning. However, one expense
that most people do not anticipate is caring
for others. This could be parents, children
the case of children, it is my experience that
these expenses can be unlimited, if boundaries
are not established. First there is college,
then graduate school, then marriage, then their
first home. Then come the grandchildren. One
of the most difficult tasks that financial planners
have is convincing their clients that they must
tell their children that they cannot afford
to support them indefinitely.
summary, retirement expenses are difficult,
but not impossible, to predict with some degree
of accuracy. Using current costs, a historic
rate of inflation and a life expectancy of 100
years, we can come up with a reasonably accurate
estimate of living expenses, which will enable
us to plan accordingly.
Diccianni is a Registered Nurse,
a Certified Senior Advisor (CSA), a Registered
Investment Advisor and a Registered Representative
with Leigh Baldwin & Company member NASD
and SIPC. She is affiliated with Ortner, O'Brien
& Ortner Advisory Group, Inc. and co-founder
of Nurturing Your Success, Inc. Her passion
is assisting clients in creating financial freedom.
You may visit Cindy at www.nurturingyoursuccess.com,
write to her at Cindy@nurturingyoursuccess.com
or call her directly at (610) 251-9393.