With soaring inflation and an uncertain stock market, do I have enough for retirement?

It’s an unusual time for people approaching retirement. While everyone wants to know if they’re financially prepared for retirement, rising inflation and a stagnant stock market may feed doubts. Some – especially those without a solid financial plan – may wonder if they need to keep operating for longer until there is more financial and geopolitical stability.

I have worked with many individuals and couples who have needed help feeling financially secure in retirement. Many have taken the initial step of planning, taking online financial “tests” and running numbers through calculators to find answers.

For anyone in this position, here is a list of recommendations to start the retirement planning process.

Understand your financial situation

Start by answering a few questions; The answers will help as the basis for any plan. Questions include:

  • What assets do you own that can be used to fund retirement?
  • How much do you plan to spend each month in today’s dollars?
  • What kind of lifestyle do you want in retirement?
  • How long will your money support you?
  • Do you want to leave money to your children and grandchildren?

Using this information, a financial advisor can develop a comprehensive financial plan. To ensure that a person does not run out of money in retirement, the plan is tailored to each person’s life expectancy. Life expectancy is often higher than people might think — according to the Social Security Administration, there is a 30% chance that men will live to 92 and women to 94. after retirement.

Should you budget or track spending?

Many people do not have an official budget. That’s okay – a budget can be beneficial for some and emotionally draining for others. But it is important to understand what current spending consists of to understand what spending in retirement looks like.

One way to build a financial plan is to assume that spending is the same during your working and retirement years. This assumption, albeit not exact, provides some flexibility if anything changes – and is an important part of building a 30-year plan.

Sometimes families spend more in retirement for a number of years while both spouses are in good health. For example, a spouse may feel that they are in good control of their retirement spending if they are spending $120,000 a year without paying a mortgage or other debt.

However, what if this couple wanted to travel more, spoil their grandchildren with gifts, and leave a decent financial legacy for their children? If so, they may need to make some changes so that their portfolio can meet these new goals.

Compile a list of specific investments and assets

Next, look at your current assets. We usually only count assets that meet certain criteria:

  • investable assets. These include cash, stocks, bonds, and mutual funds.
  • Assets that can/will be sold for investment. A common example is business.
  • Income-generating assets. These can include rental properties or royalty payments.

Financial analysis helps determine your long-term plan

To build a plan for the unique needs of an individual or a couple, financial advisors often use programs that outline how wealth will be distributed over a 20-30 year period to cover all expenses.

As just one example, the analysis might consider what would happen if you retired today, and the market started in a three-year bear market. Will the wallet sustain the required spending or will the money run out?

Financial analysis provides insight into how your retirement plan really works. And in an effort to make sure your plan stays on track, we analyze it annually, even during retirement.

One way to get started with the goal of taking charge of your money is to conduct a self-audit using the questions above. This can help provide a basic information base to begin developing a structured retirement plan with your financial advisor.

As always, remember to consult with an appropriately certified professional before making any financial, investment, tax or legal decision.

Senior Consultant, Moneta

Mike Turney’s major in planning at Moneta is in taxation and portfolio building, assisting clients with advanced planning and making financial business plans. Mike is consulted to design intergenerational wealth transfer plans, review client estate plans, create or update business exit plans, and implement tax saving strategies. Develops investment plans for new clients and evaluates investment opportunities for existing clients. Mike joined Moneta after working as an Associate Wealth Advisor at Buckingham Strategic Wealth, where he holds the title of Certified Financial Planner™. He previously worked as a legal clerk while receiving his JD and LL.M. in Taxes from the University of Washington School of Law.

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