3 Easy Tips to Plan For Retirement
Steve Vernon has been writing an ongoing guide to help Americans who are nearing retirement plan for their future. The task is tedious, and forecasting income needed for long periods of time is tough, but the advice laid out is sound. These are some highlights from Vernon’s plan that can help when thinking about savings, investments, and planning.
Income and Expenses
This may seem obvious, but knowing what costs to expect and how much cash will be needed is tough. Given that people are living longer, retirement planning is an increasingly complex activity as money needs to stretch over longer periods of time. According to Vernon, these four things will help determine your retirement income: Social Security, IRA, 401k and other retirement savings, pension income, and wages or self-employment. Part-time work and entrepreneurial activities can be a great way to supplement income in retirement, and using these four sources as a guide can help give an accurate picture of what kind of revenue stream you can expect.
For expenses, perhaps the most basic thing one can do is to analyze your spending habits. This can help give an idea of what kind of life one wants to live, and whether or not any substantial sacrifices will be needed once retirement sets in. Taking family, emergencies, food, and housing into account may seem obvious as well, but the propensity to underestimate costs occurs commonly. Vernon also advises setting aside any investment accounts that may be dedicated solely to long-term expenses, as well as using a range of pessimistic to optimistic estimates when calculating portfolio returns.