A key challenge that is likely to be faced by baby-boomers as retirement approaches is how much should be set aside for the retirement years, according to Florida Today in “Some important considerations for retirement.”
The biggest issue in many families is deciding how much money to spend from their retirement savings accounts and investments. There are many guidelines and formulas. However, no one formula is correct for every situation. Proper planning also requires a closer look to consider where to draw funds from - such as retirement accounts vs. non-qualified investment accounts. Adjustments also need to be made for market volatility and risk tolerance.
It is hard to adjust from living on a steady stream of income from work, to depending on withdrawals from what used to be accounts that were only for savings. A well-designed plan and a specific set of actions on how to live on retirement savings without taking too much money, especially at the start of retirement, is critical.
Retirees need to understand that they may, if they are lucky, be retired for more than one or two or more decades. A balance of taking not too much, nor too little, is what is needed to avoid running out of money, or frankly, not enjoying the last decades of their lives.
Savings need to last longer and must also retain their purchasing power, so that inflation, taxes and healthcare costs do not decimate accounts. We have lived through a historically low interest rate environment for many years. However, that is starting to change and we must be prepared.
Adding to the stress for retirees is not having an estate plan in place. You should speak with an estate planning attorney to ensure that you have a Will, a Medical Directive, a Power of Attorney and other estate planning documents.
Resource: Florida Today (Oct. 22, 2018) “Some important considerations for retirement”