On The Agenda:
How much money will you need in retirement? Do you still need life insurance? How much risk should you take? We’ll help answer these questions and more on today’s show.
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Episode Show Notes:
On this episode of How Money Works, we’ll share some of the things you need to know about your retirement plan.
Income in retirement
Either you guess, you take what’s available or you do some financial planning. That is probably the most important question we’re going to ask you: What type of income do you need to come in during your retirement years.
You have the must-have items – electricity, vehicles, insurance, etc. Then there are the extras, the wants in your life. You need to figure out how much money you need showing up in your account to live the life you want to live.
Some people say to take 80% of your work income, but you come up with your own number. We created a calculator in Excel that calculates how much money you’ll need based on your projected budget. The first couple of months after you retire, you’re trying to figure out finances, taxes, and inflation.
You also need to figure out how much money you want to keep in your liquid savings account versus your retirement account. In retirement, you need about six months of your expenses in a savings account that you can quickly draw cash out.
You might say, why do I need life insurance anymore? And the answer is you may not need it anymore, but maybe you do. We can help you figure out insurance needs and how you can also use it for legacy planning and taking care of your spouse and children.
When markets decline, what do you do? You need to understand how you’re going to live with the investments that you have in good times and bad.
That’s a really important conversation to have so you can build a portfolio you can live with. If you cannot live with a portfolio that goes down past a certain amount, you better have a game plan in place or you’ll panic.
How do you know if your fees are too high? Look at what you’re getting for the money you are putting in. When looking at an advisor’s fees you want to see if they are involved with estate planning, tax planning, college planning, etc. What kind of value are you getting?
Don’t just look for the lowest fee rate. Experience and training are important and can be evident by credentials. If the first thing an advisor talks about is investing money instead of starting to make a plan, that may be a red flag.
Listen to the full episode or use the timestamps below to jump to a certain section. Thanks for listening.
0:34 – Income
4:43 – Life insurance
8:37 – Risk
11:30 – Fees
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