Retirement is one of those things in life you really don’t want to guess at. However, many people are guessing when it comes to planning for retirement, especially if they aren’t working with an advisor. On today’s show, we’ll explore some areas where guessing in retirement could go very wrong.

Income Planning

If you are a DIY planner you are probably guessing at how much you’ll need in retirement. A lot of people base it on what they were making while working. But is this really smart?

The danger with guessing is you could end up working longer than necessary or end up in retirement without adequate income to do what you want to. Most of us underestimate how much we are spending but when working with an advisor they can help you do the accurate math.

Inflation Planning

As we’ve seen for the past few months, you don’t want to guess at inflation. Although we are in an unprecedently high inflationary period it’s important to prepare for this factor in retirement.

If you’re guessing you need $5,000 or so a month in retirement without accounting for inflation, your buying power is going to be drastically less than you are anticipating. You have to have inflation built into the plan.

Big Purchases

Some people blur the line between big purchases and emergency funds. However, if you know big purchases are going to come up in retirement you should plan for those separately. You probably can’t plan for every big purchase but having enough wiggle room in your plan is essential.

Health Care Costs

When it comes to the cost of Medicare and Medicare supplements, we know how much you’ll likely pay, so why guess?

When we create your healthcare plan, we like to eliminate the unknown out-of-pocket expenses by assuming double the inflation.  Don’t ignore it, run the scenario for your health and what it’ll likely cost you.

Listen to the entire episode or skip ahead using the timestamps below. 

[0:38] – Guessing in these times

[2:44] – Inflation

[8:56] – Income

[13:10] – Big purchases

[16:25] – Health care costs

A Quotable Moment:

“We make sure the plan works to begin with but then we stress test it… if long term care happens what does it look like?”

-Phil Putney