For many investors, the top retirement goal is total financial freedom with a certain income level. The income goal for one investor might be considered excess income by another. The amount you need is not what matters, as the basics are the same.
Ladies, you must be involved in all phases of retirement planning. Statistically, the woman will outlive her male spouse; therefore, women are likely to benefit the most from this planning. It is very important that your dreams and wishes be known, discussed, and planned for, so you will have no regrets in the future.
Once you become single again, and reality sets in, you will need to finally face the music and do what you avoided before. So get this done now! You are younger today than tomorrow, and tomorrow might never come, so keep reading and planning!
Determine what amount of income you need per year to fulfill your dreams and invest, in order to cover your gap; i.e., the income needed that is not yet covered by other retirement income, such as social security and pension income. Once you know your gap number—the amount of annual income you need over and above any other retirement income—divide the annual gap number by .04 percent to get the lump sum amount you need in order to withdraw an annual maximum income of four percent from your investments.
$50,000 – Income Needs
$40,000 – Social Security and Pension Income
$10,000 – Income Gap
$10,000/.04%= $250,000 needed growing in your retirement investment accounts.
If you find that you do not have enough investments to cover your gap with only a four percent distribution per year, now is the time to make some changes. Invest a larger amount of your paycheck, invest a greater percentage into equities, and get globally diversified for a potential higher and more consistent rate of return. Depending on your situation, consider lowering your current lifestyle expenses and invest for more global growth. Time is your friend, so the more time you have the better. Make your changes immediately.
Ask your free market coach to do a Retirement Cash Flow Analysis, so you can make sure you are on track. Do not depend on winning the lottery or receiving an inheritance to fulfill your retirement income needs. That is not a retirement plan!
We want you content and stress-free during your golden years.
Written by: Maria J. Wordhouse Kuitula and Phyllis J. Veltman Wordhouse, free market wealth and stewardship coaches, co-authored the book Stress-Free Investing, available at Amazon.com. Maria is the president of Wordhouse Wealth Coaching and may be reached at 616-460-6518 or [email protected]. For QUESTION LISTS and INVESTOR EDUCATION VIDEOS, go to www.WordhouseWealthCoaching.com. © Wordhouse Kuitula 2013. Photo: stock.xchng