Design Your Retirement Lifestyle Before Planning Your Retirement Budget

Design Your Retirement Lifestyle Before Planning Your Retirement Budget

Every responsible adult has to think about the future and to save for the retirement of themselves as well as their spouse. When we were children, we were introduced to the concept of ‘retirement’ as something new in the 1900′s. Social Security wasn’t passed until the 1930′s and that was when workers began to put money aside to provide for benefits in this new thing called ‘retirement’.

Along with the new Social Security system was the idea that companies had a responsibility to also provide pensions and retirement healthcare for their employees. As we approach retirement age now, we find that companies have put profits ahead of their employees and have pretty much done away with pension plans in favor of matching employee contributions to their own retirement.

Anyone fortunate enough to have saved for retirement along the way is really ahead of the game! Many people have maximized their investments and have the future well under control. Unfortunately, the majority of those that are over 50 (sometimes called Baby Boomers) are not quite so fortunate. Not only do they not have much saved toward ‘retirement’, many of them have not had the opportunity to give much thought of what retirement means to them.

Everybody seems very concerned that they will ‘have enough saved’ when the time to retire gets a little closer. Well, there is no way that you can determine whether or not you will have enough until you have determined what sort of lifestyle you would like for your retirement!

You have to answer many questions to effectively plan your retirement. There are many factors which enter into the plan. Most important are your health, age, and fitness. Next, you must take stock of your responsibilities to your parents, siblings, children, and other family members. All of these things will play a part in your plan.

Knowing where you stand, you can then begin to answer questions about when you can/will retire, what you want to do in retirement, where you want to live, and whether you envision any extra sources of supplemental retirement income. You know, especially with the internet, you can easily have some extra streams of income working for you in your retirement.

Once you have all of these issues planned out on paper, you will then need to prepare a ‘profroma retirement budget’ to estimate the cost of living for you and your wife in the first year of retirement. Then, you must have an allowance for contingencies that may arise and how you plan on handling them. Only after you have done these steps can you realistically estimate your regular monthly expenses in your retirement years.

This method provides significantly better accuracy that going by some ‘rule of thumb’ that says that you will need 60% or 70% of your current income to live comfortably in retirement. How can that kind of estimate be close to correct. Very few people live the same and do the same things in retirement that they did while they were working. How and where you live has a tremendous impact on your expenses.

You face choices. Lots of choices. After you have designed the lifestyle that you fell is perfect for you and then prepared a budget estimate, you may find that you already have enough saved or that you will need some supplemental retirement income to make ends meet. Then comes decision time. Do you ‘sharpen the pencil’ and compromise on your desired lifestyle, keep working a few years longer to build up the savings, or look for additional income streams.

This whole process need not be difficult or agonizing. It actually can be really fun! All of your life, you have been told what to do – by your parents, your teachers, your bosses, or your company. Now, you have the freedom to start with a blank sheet of paper and you are the master of your own destiny! Include your spouse and make it a wonderful and fun project. You will be glad that you did!

Resources: Don Seibert is a retired business executive who, as an Expert Author, writes timely articles on many issues concerning sources of retirement income. Having retired three times, he now is the host of http://www.RetireToEasyStreet.com Visit the site for a complete discussion of Retirement Income Options.