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Financial Advisor Houston: How much money is required to retire comfortably? The answer to the question is, 'it depends'. Here is what to do next:


Will you Outlive your Retirement Plan?

When Traditional Pensions Are No More And Social Security Is Shaky At Best - How Do You Plan For Retirement?

As the life expectancy continues to increase, so do concerns surrounding the ability for our retirement funds to outlive us. How much money is required to retire comfortably? This is the exact question you either are, or should be asking yourself as your prepare financially for your retirement. The answer to the question is, 'it depends'. You will have enough money for retirement when, on an inflation adjusted basis, you can maintain your chosen lifestyle without decreasing your investment principal.
How Much is Enough?

You have enough capital to retire when the amount within your pensions, from social security and investment returns is greater on an annual basis than your estimated budgetary requirements. One important factor within this simple equation that requires attention is that the investment returns should be estimated between 4-6% annually. Why?

Remember that in order to maintain wealth, we must first keep up with annual inflation. Long term inflation typically runs between 2-3.5% per year. So, an estimated investment return of 4-6% annually is actually suggesting that you design a portfolio which earns 6-9.5% per year on a pre-inflationary basis.

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How Long Should I Plan to Live?

This is a challenging question to effectively answer. How does anyone of us know exactly how long we will live? The answer is; we don't. So, people should not plan for their retirement based upon a spend down approach based upon an estimated life expectancy. But instead, financial calculations should be based assuming you life forever, and only on your inflation adjusted income. Using this planning technique, you won't ever run out of money. And after all, isn't that the name of the game?

Retirement planning involves ensuring that your money outlasts you. Even if you don't live to age 100 or beyond, you may. Therefore, it is crucial that your financial plan accounts for this, keeping you company throughout your entire lifespan. :

Action Steps- When to Begin Planning?

As you are getting ready to retire, you should create a timetable to begin preparing at least 2 years in advance. Two years from retirement, you should prepare an accurate household budget, review your current liabilities and interview investment advisors if you haven't already hired someone. 18 months prior to retirement, you should develop an investment policy statement and hire an investment advisor for a portion of your portfolio. A year prior to retirement, you should accumulate written copies of your company benefits policies and begin tax planning with a qualified CPA. 9 months prior to retirement, begin to re-evaluate your investment advisor's performance against your retirement goals. 8 months prior to retirement you need to complete your financial advisory team. 6 months prior to retirement, begin to accumulate any and all necessary company retirement forms and review your life and health insurance options during retirement.

Proactive planning will ensure a comfortable retirement lifestyle. Begin planning early, consider partnering with a qualified financial advisor and review your plan frequently as things can change within your personal or financial basis.

At Trippon Wealth Management Group, our goal is to be forward thinking enough to protect our clients now and in the future. Call us at 713-661-1040 and put our experience at work for you, TODAY!