Many retirees feel anxiety and/or guilt over whether to start withdrawing from their retirement savings. What do you do? This is what planning for retirement is all about. First, you should be sitting down with your financial advisor to help come up with a retirement plan. This plan needs to include investment advice that will provide future growth on your retirement savings and formulate a reasonable withdrawal structure that will keep you within your plan. Here are some important items to think about when estimating your monthly expenses during your retirement years.
- Put monthly income aside for vacations. If you take two vacations a year for 7 days a piece, at 5000 then put 10,000 aside for this expenditure.
- Monthly living bills including rent or house payment, insurance, utilities, cable, etc.
- Gifts for birthdays, Christmas, college graduates, grandkids etc.
- Health and medical bills. Always add a little extra for emergencies.
- Dining out. Take a look at your current credit card bill or payment history. How much do you currently spend dining-out. Most people are really surprised to discover how much their monthly expense is in this area. Account for this because history usually repeats itself and you will probably continue to spend this in the future. Don’t forget to add in the morning run to the local coffee shop like Starbucks. Those small expenses add up!
- Car allowance. Account for new vehicles, repairs, insurance and gas.
- “Me” spending money. Let’s face it, we all spend on frivolous stuff like pedicures, hair, massages, golf games, sports games, etc. Make sure you budget for these type of “me” expenditures.
- Gym expenses.
- Entertainment at home. If you tend to have a few parties a year, make sure you add this to your budget.
- Review all your insurances. Maybe you don’t need some of the term life insurances anymore. Your financial advisor can assist in this area.
You can make your own list off these suggestions with your advisor to come up with a monthly/ yearly expense budget. Look at your current bills and credit card charges to see where you are spending your dollars today. Your financial advisor can give you a realistic figure to withdraw monthly so you don’t run out of money. Yearly reviewing of this plan is suggested to readjust for any unanticipated events. It’s important to review all laws that affect withdrawals from 401k and IRA plans. Your financial advisor can also cover when it is best to start collecting social security benefits.