Assess Your Retirement Income

When you make a list of the things you spend money on – be it rent, groceries, internet, movies, et cetera – do you include your future? Knowing just how much money you will have available in retirement can influence your financial stability and the freedom to live the life you want. Whether you’re thirty days or thirty years away from retirement, now is the time to assess your future income.

Things to Consider as Future Income Sources

Did you know that more than half of Americans (52%) are at risk of not having enough money saved for retirement to maintain their standard of living?¹ Assessing how much you are currently saving and what your projected income will be in retirement can help you determine if you will have enough money later in life. Here are some income sources to consider during your review:

Social Security

You can check your yearly earnings, as well as what your distributions will be, by visiting ssa.gov. Unfortunately, Social Security isn’t designed to cover all your expenses in retirement. As of 2024, the average monthly Social Security retirement benefit is approximately $1,907.² Reviewing your Social Security earnings can help you determine how much money you need to accumulate using other savings vehicles so that you can meet your retirement goals.

401(k) or Other Workplace Retirement Plans

Chances are you have some kind of retirement savings plan available through your employer. If you haven’t started contributing to this account, you could be leaving money on the table. Many employers will match employee contributions to a certain extent, so it’s a good idea to try and contribute at least enough to get the full match.

If you already contribute to a 401(k), 403(b), or a similar plan, reassess how much you’re contributing and what it will amount to in the future. This assessment could reveal that you need to contribute more each month in order to meet your income goals for retirement.

Investments

Do you have bonds, annuities, or mutual funds? When you assess your retirement savings, consider dividends from your investments. While annuities and target date funds are typically for additional income in retirement, they also come with risk and responsibilities.

For example, you run the risk of market volatility or the issuing company defaulting before you gain your returns. Keep this in mind when you determine how much you will rely on investments for future income.

Individual Retirement Account (IRA)

You have two main options when it comes to opening an IRA: Roth and Traditional. Roth IRA contributions are taxed upfront, while Traditional IRA contributions and gains are taxed upon withdrawal. When calculating your IRA’s future value, consider taxes, fees, and penalties, which might affect how much money you’ll actually have available.

Things to Consider for Your Future Budget

Building a budget takes imagination. This is your time, your money. What do you want to do with it? Of course, you’ll probably still have a house payment, utilities, and insurance, but what about travel and family time? Here are some things to remember when creating a retirement spending plan.

Lavishing the Grandkids with Gifts

Many people find that their future goals center on the family. You might be taking your grandkids to the movies, planning day trips, or buying gifts. When you create a spending plan for retirement, consider allocating a portion of savings towards family activities and events.

Exploring the Great Outdoors

Leave your cubicle behind and discover new places! Consider saving for airfare, hotels, cruises, travel insurance, and other expenses. Researching current costs now can help estimate how much to save for retirement travel.

Long-Term Care

Nearly 70% of adults aged 65 and older will need long-term care at some point in their lives.³ Long-term care can include in-home assistance, assisted living, or nursing home care. Consider options like long-term care insurance or annuities with care riders to cover these costs.

Things to Consider Today

Figuring out where your income will come from is important, and deciding what it will go toward is the fun part. This is where you get to determine your goals, plan your adventures, fill your newfound free time, and ensure you have the funds to make it all possible.

Your Money Coach can help you plan and prepare for the best retirement possible. Once you determine the lifestyle you want, your coach can walk you through an in-depth retirement analysis so you can calculate how much money you might need to save and how you might adjust current savings contributions to meet your goals. Schedule a session with a Money Coach today.

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¹ Center for Retirement Research at Boston College. “National Retirement Risk Index.” 2023. https://crr.bc.edu

² Social Security Administration. “Monthly Statistical Snapshot, March 2024.” https://www.ssa.gov/policy/docs/quickfacts/stat_snapshot/

³ U.S. Department of Health and Human Services. “Who Needs Care?” LongTermCare.gov, 2024.https://acl.gov/ltc/basic-needs/how-much-care-will-you-need