Episode 63: What is a Good Retirement Income?
The question we’re answering today is, “What is a good retirement income?”
What Do You Want to Spend Your Money On?
This ultimately depends on what kind of lifestyle you want to live in retirement. Let’s take myself and my wife as an example. I’m 60 years old and I’m not going to tell you how old my wife is, but let’s just say she’s around the same age, and let’s say I want to retire at age 65. The best way to start with what a good retirement income is by asking yourself, well, what do we want to spend our money on? Usually, a pretty good indication is what you’re spending your money on today. Let’s say that Wendy and I figure out that we want $10,000 a month of after tax money to spend. That to us is a good retirement income because we just decided it was a good retirement income. That’s the place to start when you want to build your financial plan, when you want to figure out what we need to do to make sure we’ve got that $10,000 coming in after tax so that we won’t run out of money. You get to decide what your ultimate retirement income is. Then, a good financial advisor can come up with a plan based on your guaranteed income sources like Social Security, a pension, or investments, how much can you depend on coming in for the rest of your life.
Inflation and Cost of Living
Of course, we’ve got inflation, which means you’re going to need raises every year to keep up with the cost of living. So that $10,000 I mentioned that Wendy and I would want today, well, five years from now, I’m going to need more money to buy the same goods and services that $10,000 buys today. That might be maybe $11,500 five years from now. A good financial advisor will factor that all in to an income plan.
Takeaways
The answer to the question, “what is a good retirement income?” depends on what you want. The best place to start is deciding what you want, how much money after taxes you need to do that every single month and then a good financial advisor once again can build out that retirement income plan. So, what is a good retirement income? It’s kind of what you decide and then we’ll see if we can make that work.
Thanks for joining me and I hope you found this information helpful!
P.S. If you enjoyed this topic and want to learn more, download your copy of our guide, “Pre-Retirement Checklist”.
P.P.S. Feel free to submit questions here for a chance to have them answered!
