Broker Check
Financial Planning: How to Maintain Your Lifestyle in Retirement

Financial Planning: How to Maintain Your Lifestyle in Retirement

May 08, 2024

If you want to know how much money you’ll need in retirement, you must start by visualizing your desired retirement lifestyle. Do you want to keep your current lifestyle, or do you plan to travel, relocate, go back to school, or volunteer somewhere? Financial planning can help you make your retirement dream a reality, but first you need a clear picture of your future.

Your lifestyle may change when you retire. Partnering with Prosperity Financial Solutions for your financial planning needs can help you clarify your lifestyle goals for retirement and set you on a path to a brighter financial future.

Financial Planning for Retirement

Starting financial planning early is key to finding out how much money you need for retirement. A financial professional can help you target the following aspects of your finances:

  • Tracking spending
  • Determining your retirement goals
  • Estimating your future income needs
  • Saving and investing
  • Planning for long-term care

Sorting out these preliminary steps can provide confidence as you begin plotting the retirement you’ve always dreamed of.

Budget

Tracking what you’re spending now helps you see what you might spend later. Most people don’t like creating budgets, but you must understand where your money is going if you want to have enough set aside for your post-working years.

Determine Your Retirement Goals

The cost of retirement usually depends on your goals. Here are three questions to answer when setting your goals:

  1. How do I picture my retirement?
  2. Where do I want to live?
  3. What kind of lifestyle do I want?

Once you know what kind of lifestyle you hope to enjoy, you are able to begin budgeting appropriately and exploring possible sources of income if needed.

Future Income

Financial concepts like the wage replacement ratio can help you estimate the amount you need to save for retirement.

Let’s say you’re currently earning $80,000 a year. According to the replacement ratio theory, you’d need around $64,000 (80% of $80,000, or 80,000 x .80) in your first year of retirement. If you won’t be retiring for another 20 years, however, it’s important to keep in mind that $64,000 probably won’t amount to as much, which means you need to adjust your projection.

An experienced financial advisor can explain the wage replacement ratio in further detail and help you figure out a number to aim for.

Save and Invest

If you save and invest early, you benefit from compound interest. The longer you save, the more your money can grow. Other strategies include contributing the maximum to your 401(k) to take advantage of any match from your company. You can also open an individual retirement account (IRA) or a Roth IRA.

As with a 401(k), IRA contributions are pre-tax, offering a tax deduction now but taxing your withdrawals in retirement. The Roth IRA takes after-tax dollars, allowing your money to grow and be withdrawn tax-free.

Beyond your retirement savings and investments, your other sources of income may include a pension and Social Security. Consider waiting longer to claim your Social Security benefits (between age 62 and 70) to maximize them.

Consider Your Health

Americans are living longer, meaning your savings have to last longer. You must also account for possible long-term care. For example, if you’re paying for a private room in a nursing home, the average cost is $120,304 per year.

Along with the previously listed options, annuities, a type of investment that provides a lifetime payout in retirement, and long-term care insurance can help you retire with the confidence that you can maintain your preferred lifestyle. Make it a point to review your retirement plan regularly (at least once a year) and adjust it to suit your financial circumstances or changes in the law.

Sound Financial Planning for Retirement

If you’re looking to jump-start your retirement planning, turn to Prosperity Financial Solutions. As a veteran advisor, I possess deep knowledge of the ins and outs of financial planning and can help formulate a plan that can get you where you want to be.

Call (561) 207-6213, email davidwilcoxfinancial@yahoo.com, or book a 30-minute complimentary call online.

About David

David Wilcox is president and cofounder of Prosperity Financial Solutions, a financial services firm, based in Palm Beach Gardens, FL, specializing in retirement planning, estate planning, and investments. Since 1987, David has been assisting pre-retirees, retirees, and investors with comprehensive retirement planning, helping them preserve their wealth, increase their retirement income, and avoid common financial mistakes. Prioritizing financial education, he employs strategies to instill confidence and comfort in his clients as they make decisions and move toward their ideal financial future. He also highly values building relationships with clients and strives to make them feel like part of his family.

David holds an associate’s degree from Broward College, a bachelor’s degree from Florida State University, as well as the Life Underwriter Training Council Fellow (LUTCF®) and Long-Term Care (CLTC®) certifications. A firm believer in professional education and participation, he is a member of the Global Financial Association, a member of NAIFA (National Association of Insurance and Financial Advisors), and is a Certified National Long-Term Care instructor. Teaching and mentoring other financial advisors, David presents dozens of seminars and workshops on long-term care and investment planning throughout the country. Outside of the office, family man David enjoys golfing, fitness, and spending time with his kids on the boat, going for long walks, and traveling to new places. He wants to provide a positive example for his children and show them that it’s never too late to follow your dreams. To learn more about David, connect with him on LinkedIn.