CREATING A BUDGET FOR RETIREMENT

It only makes sense – yet many retirees live without one.

The importance of budgeting. You won’t be able to withdraw an unlimited amount of money in retirement, so a retirement budget is a necessity. Some retirees forego one, only to regret it later.

Run the numbers before you retire. Years before you leave work, sit down for an hour or so and take a look at your probable monthly expenses. Perhaps you decide that you’ll need about 75-80% of your end salary in retirement. Perhaps closer to 65-70%. There’s no “right” answer for everyone. Online calculators may help you get at least a basic understanding initially, but remember – a qualified financial professional is likely going to be able to take more into account for you than a simple calculator could.

You first want to look for changing expenses: housing costs that might decrease or increase, health care costs, certain taxes, travel expenses and so on. Next, look at your probable income sources: Social Security (the longer you wait, the more income you may potentially receive), your assorted IRAs and 401(k)s, your portfolio, possibly a reverse mortgage or even a pension or buyout package.

While selling your home might leave you with more money for retirement, there are less dramatic ways to increase your retirement funds. You could realize a little more money through tax savings and tax-efficient withdrawals from retirement savings accounts, by reducing your investment fees, or by having your phone, internet and TV services bundled from one provider.

Budget-wreckers to avoid. There are a few factors that can cause you to stray from a retirement budget. You can’t do much about some of them (sudden health crises, for example), but you can try to mitigate others.

* Supporting your kids, grandkids or relatives with gifts or loans.
* Withdrawing more than your portfolio can easily return.
* Dragging big debts into retirement that will nibble at your savings.

Budget well & live wisely. A carefully thought-out budget – and the discipline to stick with it – may make big difference in the long run.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Neither the named Representative nor Broker/Dealer gives tax or legal advice. All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. The publisher is not engaged in rendering legal, accounting or other professional services. If other expert assistance is needed, the reader is advised to engage the services of a competent professional. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and cannot be invested into directly. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. This material was prepared for Redwood Financial Network’s use.

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