Retirement, it’s supposed to be our golden years but for many it creates stress and worry about… money. We spend our working lives saving for retirement with thoughts and dreams to go after that bucket list “when we retire”. But then we worry. Will our retirement cash flow be enough?
How much money do we need? $1M? $2M, more?
A Million Dollars:
A recent USA Today article, Why even $1M may not be enough for retirement, brings reality to light.
What? A million is not enough? Well thirty years ago, $1 million was a huge amount of money, but given today’s lifestyles and costs, it isn’t so much money any more. Why not? Because the $1M you’ve saved only translates into around $40,000 to $50,000 (annually) in sustainable revenue.
That is not that much money on an annual basis for today’s lifestyles.
And for most Americans who are primarily saving in qualified plan programs (like 401ks, 403bs, IRAs, etc.) that projected $40,000-$50,000 has a lot of pending tax consequences wrapped up with it. (Remember, most qualified plan monies, when accessed, will be fully taxable at ordinary income rates.)
One mistake that people make is that they assume that they will spend less in retirement. It’s an understandable misconception as it’s often touted as such by many ‘financial gurus’. However, if you retire in good health, statistics say you are likely to spend more money, especially in the first few years. Why? Your bucket list, your vision, now you have time!
It’s About Cash Flow:
What can you do? Create a financial plan to include a cash flow plan. It’s all about cash flow. Your working years are about accumulation, it’s what you know.
Your retirement years are all about the distribution of your wealth back to you,
your cash flow.
It’s a constant battle between cash vs. longevity, inflation, taxes, healthcare and market volatility. Depending on your needs, $1 million probably isn’t enough. After all, we are basically talking about 30 or 40 years of unemployment, called retirement. Create your cash flow plan and understand how your needs, wants and wishes will be met.