Step 3: Calculate and get a pretty good idea of what your expenses in retirement will be. Some expenses will increase in retirement, while others may decrease, but focus on areas such as housing, food, transportation, clothing and personal items, health care, entertainment, and travel to name a few.
Step 4: Total up your income from all sources in retirement. In retirement, you’ll likely have a patchwork quilt of several sources of income from areas such as Social Security, retirement accounts, stocks, bonds and mutual funds, CD’s, inheritance, annuities, and money market funds for starters.
Step 5: The previous 4 steps will help determine in Step 5 if you have a projected retirement surplus or a shortfall.
After knowing what you envision your retirement to be, looking at your assets, savings and investments, having calculated your income in retirement less your estimated expenses, you’ll be able to tell if you have a retirement shortfall… and if so, how big.
Step 6: If there is a shortfall, lay out the various options available and evaluate the associated tradeoffs with each one.
A Retirement Income Analysis is the easiest way for you to know with confidence if your Retirement Income Plan is sustainable for 20+ years of retirement.
*Employee Benefit Research Institute (EBRI) 2012 Retirement Confidence Survey March 2012 http://www.ebri.org/surveys/rcs/2012/
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