Walking away from a working career means leaving a consistent paycheck behind, and that can be a scary thought. How will you replace that income and ensure yourself that your money will last the rest of your life?
The answer will always come down to income planning. This key piece of the retirement puzzle is often overlooked by people who manage their own finances and you’ll often find that pre-retirees are not prepared in this area.
There could be a number of reasons why someone doesn’t have their income plan buttoned up before retirement, but one of the most common mistakes is not accurately assessing what your expenses will be. By doing that, it makes it impossible to plan for the correct amount of income you’re going to need each month.
People that assume their income will be lower than it actually needs to be in order to match their lifestyle will suddenly have to tighten their budget to avoid running out of money. That’s a stressful position to find yourself in when you’re no longer working.
It also happens on the other end of the spectrum. Too many people believe their income needs will be much higher than they turn out to be and those people end up working much longer than they had to. In those situations, you might miss out on a couple extra years of retirement.
There’s too much guesswork that takes place without the guidance of a professional who possesses the experience of working through these situations on many different occasions.
Once you’ve determined what your income needs are, a financial advisor can also help you develop a plan to accomplish those goals. The great thing about building an income plan is that there are a variety of ways to generate the money needed to fund your retirement. It can come from Social Security, pensions, retirement accounts, annuities, investments, and other sources.
An advisor is also able to help you identify the best strategy for utilizing all of your assets in the most effective way possible. That can also help save you money over the course of your retirement by ensuring that you’re maximizing everything you’ve already earned.
If an income plan isn’t something you’ve put much thought or time into yet, make sure it’s a priority before retirement. It truly can be the difference between a successful retirement and one where you’re left worrying whether your money will last.