Page 83 - Workbook3E

Create your own retirement plan
Evaluate each investment in terms of: (1)
yield, (2) safety, (3) liquidity, (4) guarantees
and insurance, (5) term of investment, and (6) inflation hedge—in other words, how the value of your investment will keep up with inflation. With all there is to know about investments and savings, it’s a good idea to get professional help.
Your Spending Habits
Retirement planning depends on a careful analysis of how much money you’ll have to spend. Here’s a good example:
Sources of Income for Retired People:
Pensions, annuities, dividends, interest, rent, and gifts 49% Social security 30% Earnings from work 20% Supplemental Security Income and public assistance 1%
Source: U.S. Census Bureau
Your current spending is a good projection of how you may spend after retirement. Don’t forget to take inflation into account and make adjustments for it. Just as in Workbook 1, think of your expenses as either “Needs,” or “Wants.”
Needs: The essential items you need to live your life: food, clothing and shelter—the basics. These expenses also include necessary large expenses like medical care, transportation, funeral expenses, etc.
Wants: Optional items like a tour of Australia or that new Land Rover— do you really need it, or to you want it. You know the difference and either way it’s all right as long as your retirement spending plan can handle it. Overextending yourself is one stress you don’t want to deal with during retirement.
Major Retirement Expenses—Keep in mind several retire- ment expenses large and small you need to plan for.
Housing—What’s your lifestyle?
As you learned earlier, many things can affect your retirement housing costs. It’s important to have a clear picture of what you want your retirement housing lifestyle to be. You’ll want to be comfortable where ever you call home.
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