By Robyn A. Friedman
City & Shore PRIME Magazine
What is your ideal retirement? Playing golf every day? Traveling the world? Spending time with the grandkids?
Whatever your plans, you won’t achieve them unless you have sufficient funds. And, with the Social Security Administration estimating the average monthly benefit to be $1,355 in January 2017, you’ll need to know how to stretch your cash flow, no matter what the source.
“Many retirees underestimate how much they’ll need,” says Michael Silver, a certified financial planner with Baron Silver Stevens Financial Advisors in Boca Raton. “With life expectancy increasing, they may have almost as many years in the spending phase of their life as they had in their accumulation phase.”
That means you’ll need to save more so your nest egg lasts longer than prior generations.
Don’t overspend. You may take that dream vacation when you first retire, but watch spending after that. A good general rule is that you can safely withdraw 4 percent from your investment portfolio per year without running out of money, Silver says. But with historically low interest rates today, “it’s difficult to get to that 4 percent withdrawal rate without relying on some growth in your portfolio,” he adds.
Know that your income needs may not change. “Most people will need 80 to 100 percent of their working income in retirement,” says Mari Adam, a certified financial planner in Boca Raton. Today’s retirees are active and enjoy travel and leisure activities. Plus, they need to pay for health care costs not covered by Medicare.
Stick to a budget. Use a program like Quicken to keep track of income and expenses.
Downsize. Do you really need that big house and high utility bills? If your budget is tight, give serious thought to downsizing.
Choose appropriate investments. Adam says you may need income and growth to support a 30- to 40-year retirement.
Don’t support adult children. Keep your own finances healthy and strong.