Setting a Retirement Budget
“What kind of retirement do I want?” Deciding the kind of retirement you want is important. We have a process to address the concerns we hear the most.
- Will our money last throughout our lifetime?
- How do we create a reliable income stream from what we have saved?
The advisors at Compass Point will get you organized and ready to create a retirement budget. First, we discuss your needs, wants, and wishes:
NEEDS — “Needs” are considered monthly necessities during retirement. While immediately easier to identify, other things may eventually fall into the “needs” category. Health changes, inflation and life insurance once covered by an employer are needs that have a financial impact in later years. A well-planned retirement budget considers these and much more.
WANTS — There is a balance between your retirement paycheck and how you live out your retirement budget. Your “wants” are usually big ticket items for things like college education for children or budgeting for a wedding. These “wants” are more concrete and tied to life’s milestones compared to a “wish,” but have as much of an impact on your retirement budget.
WISHES — The difference between “wants” and “wishes” may seem like splitting hairs. Traveling or buying a dream car or vacation home fall into the “wishes” category. It’s fun to dream, but remember to be realistic. “Wishes” that are realistically considered have a higher likelihood of being achieved.
The earlier you begin working with a financial advisor to determine your retirement budget, the longer you will have to plan, save and adjust.
Critical Choices for Retirement
Now that needs, wants and wishes are determined, you see a realistic idea of the savings it will take to fit your budget. Next, you have to consider “At what age do you plan to retire?”
Retirement is growing to be a longer stage of life, requiring a long-term strategy. The average couple who reaches age 62 in 2013 has at least a 50% chance of one or both surviving to age 92 and data shows this is consistently rising. We advise clients to look at planning for at least thirty-plus years, if not more. How do you generate thirty years or more of an income that rises to keep up with inflation, without running out of money along the way? To continue reading, click here >>
As we see it, there are only a few true categories for investment choices available for retirement. Given our study of the history of all choices, we focus here on four of the most common: Cash investments, Bonds, Large Company Stock and Small Company Stock. To continue reading, click here>>
Many people labor over when to start taking their Social Security benefits. Should you start immediately when eligible at age 62 and accept a reduced monthly payment, wait until full retirement age (currently 66), or even delay until age 70 to earn a larger monthly payment? In a perfect world, waiting until the age of 70 maximizes the monthly benefit. However, the world isn’t perfect, and no one’s retirement is in a vacuum. This leaves us with our original question of “How long should one wait until filing for Social Security?” To continue reading, Click Here>>
The TRU Method
The Modern Approach to a Retirement Paycheck
You Can Count On
You’ve heard it already. People are living longer, and you may be looking at a retirement that lasts 30 years or more. That’s a lot of years to fund! Simply put, your financial security in retirement means successfully answering the two most important questions about retirement:
1. How do I invest the money I’ve saved?
2. What is the monthly maximum I may safely spend without running out?
Most retirement plans focus heavily on the first question. But answering the second question is what really determines your financial success or failure in retirement. Spend too much, and you may run out of money. Spend too little, and you might not live as well as you could. To successfully answer that critical second question, Compass Point Retirement Planning has created the TRU Method, a proprietary process engineered with the objective to calculate your regular, maximum monthly paycheck so you can reach your goals of living an optimal lifestyle throughout your retirement without running out of money.
Learn more about The TRU Method here >>