Something to think about …
If you cannot live on 70% of your income as you approach retirement by minimizing debt and reducing expenses (like mortgages) then you may want to consider changes to your personal savings and/or contribution rate. In retirement, you will not have the 7.65% (your personal net effective percentage may be less than this if your earned income exceeds $102,000 for 2008) for Medicare and Social Security deducted from your pay (unless you continue to have earnings) and you will, most likely, stop investing in your retirement (the % that is being deducted from your pay now). That may get you back down to 80-85% of your income or less.
On the other hand, in retirement, you may not have a mortgage but you may have some property taxes and home insurance premiums to consider. You will have to pay for your own healthcare, in most cases, and maybe long-term care insurance and those premiums and co-pays could be as much as 15-20% of your retirement income depending on the coverage desired.
That is why many financial planners now say you may need to replace 100% of your income unless you are able to reduce your spending plans. If you make an appointment with me, we will do a detailed analysis and you may find that the answer is 40-50% of your income needs to be replaced. One thing for sure is that you should know where you are headed.
Are you up to the challenge?
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.