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Don’t Leave Your Retirement Up To Chance

Monday, January 13, 2020 | Leave a comment

 Thank you for taking the time to read our latest article on How Much Money You Will Need In Retirement. Through our firms association with Safe Money.com we have been provided with a brochure called Don’t Leave Your Retirement Up To Chance. Please e-mail john@casasantafinancialservices.com with your current mailing address and we will mail aContinue Reading…

Estimated reading time: 2 minute(s)

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Calculating how much income you will need for retirement isn’t necessarily an easy task. Your health expenses will probably increase, but your mortgage payments may decrease or stop. Meanwhile, other expenses might continue to change over time. Of course, you likely won’t have to deal with payroll taxes as much. Chances are you will also see expenses tied to employment, from transportation to a professional wardrobe, decline as well. But other costs may appear in retirement, from pursuing long-sought hobbies to traveling or spending more time with loved ones. Although you may not even know where to start when trying to estimate how much retirement money you will need, there are a few rules of thumb that you can follow to help get you started. Start With Your Current Lifestyle and Income The first thing to look at is the amount of income that you need right now. This will give you a baseline to work off. Say your current lifestyle costs $60,000 of income per year to support. Your future retirement lifestyle will probably need an income that is somewhere near that level, unless major medical expenses arise (which can happen). If you needed much more income than that to support your future lifestyle, you might consider delaying Social Security. Your benefits will accrue with each year you wait. If you kept on working, it would also give you more time to invest and grow your nest egg. Ultimately, that would help you be even better prepared for the transition to a secure and comfortable retirement. Since your current income supports your present lifestyle, it’s a natural starting point to estimate your retirement income needs. Calculate Your Expected Future Income From there, start doing a deep dive into numbers. Write down estimates for expected future retirement spending. The more you go into your current expenses and really think about how those expenses might change over time, the better prepared you will be when you switch over to retirement. You want enough, or better yet, more than enough annual income to cover your retirement spending needs. If you need help getting started with your expected retirement expenses, here are the common areas of retirement spending: • Housing: rent or mortgage payments, property taxes, homeowners or renters insurance, property repairs and maintenance • Food and grocery • Clothing • Utilities: gas, electric, telephone, cell, water, cable TV • Transportation: car payments, auto insurance, gas, car upkeep and repairs, public transportation • Insurance: medical, dental, disability, life, long-term care • Healthcare costs not paid by insurance: deductibles, co-pays, prescription drugs • Care services for parents or loved ones: costs for nursing home, home health aide, or other type of assisted living services • Recreation: eating out, entertainment & hobbies, travel • Debt: personal loans, business loans, credit card payments • Taxes: income (federal and state), capital gains tax, alternative minimum tax (if applicable) • Education: personal student loans, children’s student loans or educational expenses, grandchildren’s student loans or educational expenses • Investments: contributions to IRAs, investment accounts, annuities, any other portfolio assets • Gifts: charitable and personal giving • Miscellaneous: personal caretaking, club memberships, subscriptions, pets, so on Don’t forget to include inflation in your projections here. Some expenses are likely to change during your retirement, such as the house payment or educational expenses of loved ones. Healthcare will become more costly as you go along in retirement as well. Include some buffer in your projections for health costs. Ask for guidance from a financial professional to help you confirm that your estimates are on point and are realistic. How Long Will Your Retirement Last? You will need to decide the age you wish to retire and how long you expect for your retirement to last. That will determine how many years of annual income you will need that you were estimating above. Family history and your personal medical history can provide strong clues of how long you might live for. Nevertheless, err on the side of caution and use a prudent timeline for your planning. A 30-year span or longer is a conservative time window to use in your income planning. Identify Your Sources of Retirement Income From there, identify your sources of income. What sources of retirement income will be available to you? Does your employer offer you a pension? What age will you claim Social Security? How much will you receive in monthly payouts from Social Security by claiming your benefits at that point? Your other sources of income are likely to include a 401(k) or other retirement plan, IRA, annuities, taxable brokerage accounts, and other places you might hold investments. How much cash-flow you receive from these sources will depend on how much you have invested, the returns you earn, and their taxable status. If you keep working in retirement, your earnings can be another source of income. If you do find any shortfalls between your future annual retirement income needs and what your retirement assets will generate, act now. There are a variety of steps you can take to overcome the gaps: • Cut back on expenses now so you have more to save. • Delay retirement by working longer and putting away more of your earnings for retirement savings. • Change your retirement goals and lifestyle expectations so you don’t need as much money. • Work part-time in retirement to supplement your other income sources. • Look for ways to supplement the gaps with income-supplementing mixes of higher-growth investments and annuities. • These measures can go a long way towards funding the retirement income gap between your current income and your projected retirement income. What if it looks like you won’t have enough assets to pay for your retirement long-term? Then consider pursuing a strategic combination of these measures to help fill in the gaps. Plan for an Income-Certain Retirement Estimating the amount of money that you will need to retire isn’t easy. But following the rules of thumb laid out here can help you accurately project the amount of income you will need for a comfortable retirement lifestyle. If you are looking for answers on how to create a guaranteed lifetime income that will never run out or have questions please contact John CasaSanta @ 704-451-7020 or e-mail john@casasantafinancialservices.com CasaSanta Financial Services 6913 Beamish Place, Charlotte, NC 28227 Phone: (704) 451-7020 john@casasantafinancialservices.com www.casasantafinancialservices.com

Friday, January 10, 2020 | Leave a comment

Estimated reading time: 1 minute(s)

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Annuities = Greater Tax Efficiency in Retirement

Friday, September 13, 2019 | Leave a comment

As an annuity owner, you take comfort in knowing that you have planned for an uninterrupted lifelong retirement income stream. Working alongside other income sources from your nest egg, it will pay out, like clockwork, to fund the retirement you have always imagined. But have you considered whether your income streams are as “efficient” asContinue Reading…

Estimated reading time: 14 minute(s)

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Don’t Let Annuity Myths Fool You

Wednesday, July 31, 2019 | Leave a comment

Before you add an annuity to your income strategy, it’s prudent to understand what an annuity does and what it doesn’t do. Essentially, annuities are insurance contracts. They are built to pay lifelong streams of fixed income, protect money from market losses, or offer tax-deferred money growth. Indeed, billions of dollars sit in these contracts. A large part of that isContinue Reading…

Estimated reading time: 18 minute(s)

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