| If you love doing what you're doing you'll most likely | | | | retirement income needs way before you ever want |
| never want to retire. It's often said that most of the | | | | to retire. Try one on the many retirement income |
| wealthiest people in the world still work in their own | | | | calculators available online to work this out. |
| companies not because they have to but because | | | | When calculating the expenses you will have in |
| they want to and enjoy it. However, I bet you they all | | | | retirement, keep in mind that they are in today's dollars. |
| have retirement plans folded away neatly in their back | | | | To get a better idea of what they will be when you |
| pockets. | | | | are ready to retire, you should adjust them for inflation. |
| For many people their job-description becomes their | | | | A current income need of $20,000 per year adjusted |
| self-description and so when they retire from work | | | | by 4% inflation year on year translates to a |
| they can feel worthless and wither away fast. To cap | | | | requirement of $43,800 per year 20 years later. |
| things off, many retirees at 65 die within 2 years of | | | | Cat Food or Caviar!? |
| retiring. Jeez, what an anti-climax! It's no wonder people | | | | A standard employer-sponsored retirement savings |
| don't bother planning their retirement! | | | | plan such as a 401(k) is the mainstay in most financial |
| No Job, No Stress, No Pay! | | | | retirement plans. Individuals can utilise a standard IRA |
| A popular rule-of-thumb claims you need roughly 70% | | | | or Roth IRA also. Many self-employed people opt for |
| of your pre-retirement income (90% if you wish to | | | | a Self-Directed 401(k). Relying on a standard |
| maintain your pre-retirement standard of living). | | | | retirement savings plans will prove unsatisfactory as it |
| Work-related expenses will decrease whilst healthcare, | | | | generally will fall way short of your retirement income |
| leisure-related expenses increase. This assumes you're | | | | needs. However, faced with a choice of having a |
| in relatively good health and medical care costs are | | | | standard retirement savings plan (e.g. a 401(k), |
| modest. If your health is poor your healthcare | | | | standard and non-standard IRAs etc.) versus having |
| expenses will escalate. | | | | no retirement savings plan at all, I would definitely |
| Financial security during retirement is probably priority | | | | prefer to have even a standard 10% of my earnings |
| no. 1 for most people. To live securely and comfortably | | | | invested in standard retirement plan than in nothing at |
| in retirement for many people means at the very least | | | | all. If nothing else it's a good habit to "save and invest" |
| generating sufficient income passively by means of | | | | a % of your income. However, unless you are putting |
| some retirement savings plan or other financial assets | | | | away large chunks of cash into your retirement plan, it |
| to allow them to live according to their usual standard | | | | alone is probably not going to give you more than a |
| of living. | | | | lower-middle class lifestyle during your retirement. |
| There are 4 typical sources of retirement income: | | | | Typically, if your retirement income needs are modest, |
| Social security benefits | | | | social security benefits may provide 20-30% of your |
| Employer-sponsored retirement plans | | | | retirement income whilst employee-sponsored |
| Post-retirement employment income | | | | retirement plans may provide 20%. Therefore, it is your |
| Personal savings and investments | | | | personal savings and investment strategies that will be |
| Whilst you may be diligently putting away for your | | | | the key differentiator between you living off cat food |
| retirement, the real challenge is to know your | | | | or caviar! |