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How will you spend your retirement?

Have you thought much about retirement? Many people think of retirement only in financial terms. However, retirement is an emotional goal as well as a financial one. In fact, it is one of the most emotional transitions you will experience in your life. The earlier you start preparing, the easier it may be to retire in the lifestyle that you choose.

Think of retirement planning as simply a balance between your financial resources and your lifestyle. As a matter of fact, isn't that balance the most difficult one to accomplish in our daily lives? Are we not always trading off, consciously or unconsciously, our todays for our tomorrows? For example, purchasing that larger home with the bigger monthly mortgage payment may mean that a lot less will be set aside for retirement.

Determine your retirement goals

This is when ideas about how you plan to live during retirement are clarified into specific amounts of money needed for living expenses, recreation, healthcare, etc. Define your goals and then create a plan to help achieve those goals. Think about what you will do in retirement. For some, retirement is a time to do all of the things they never had time for while working. For others, it is a time for leisure and rest. For most, it is something in between. What is it for you?

Identify income and start saving

To build financial security for your retirement years, it’s important to have a retirement plan that takes into account how much you will receive from Social Security and your pension and lets you know how much you need to save to reach your income goals.

Experts generally say you will need 60 percent to 80 percent of your current income each year to get you through retirement. For most of us, the combination of Social Security and CalPERS or other pension benefits won’t total that much. That’s where personal savings comes in. It’s never too early or too late to begin saving for retirement.

Source: CalPERS

What to expect in living expenses after retirement

These expenses usually decrease
  • Mortgage payments
  • Clothing
  • Taxes
  • Debt repayment
  • Transportation
  • Disability income insurance
  • Savings and investments

These expenses usually increase
  • Rent
  • Home upkeep
  • Utilities
  • Insurance
  • Long-term care
  • Vacation/recreation
  • Contributions and gifts
  • Health insurance