Financial Anxiety vs Written Retirement Income Plan

Financial Anxiety About Retirement

Imagine living your retirement years free from financial worries—sounds too good to be true? It’s not.

An Engineer’s Perspective

Let me share a recent experience that surprised me. An engineer came to me with his wife. Typically, engineers like a lot of technical explanations and prefer to do things themselves in a “hands-on or DIY way.” This engineer said to me, “Charles, I’ve been watching your videos, and I no longer want to worry about generating income from my retirement savings during retirement. Can you take care of that for me?”

It was a big step for someone so technically-minded to ask for help managing their retirement finances. It helped me realize there are a lot of people out there feeling anxiety and stress about retirement, both before and during their golden years.

What is your retirement income plan going to be?

Determine Your Expenses

First and foremost, you’ve got to establish your retirement goals and expected monthly expenses. How much does it cost you to live each month? How expensive of a lifestyle do you want to live? On our website at cdfinancial.org, on the homepage, scroll to the bottom, and you’ll see a spreadsheet for calculating monthly expenses, or you can also click this link for an instant download of the spreadsheet,Monthly Household Expenses.

You will want to be comprehensive and include everything – not just the obvious expenses like a mortgage payment (if you still have one), insurance, etc. Think about how often you go out to eat currently; retirees tend to dine out more with their extra free time. And they tend to travel more as well to check off bucket list destinations. Consider it all.

Once you tally up costs for entertainment, dining out, vacations, gifts, salon services, charitable donations, helping out kids or grandkids financially, any large future purchases like cars or a descendant’s downpayment on a home, lawn care services, etc., you will get a clearer picture of your monthly expenses.

Identify Income Sources

What’s next? Now you want to identify what your sources of income will be in retirement. If you have a pension, how much will the net amount be after taxes and any deductions for a survivor benefit for your spouse? A lot of federal employees and CalPERS retirees ask me about calculating their net pension amount.

What about social security? You’ll want to know not just the gross amount, but the net after any taxes or Medicare premiums are deducted. If you want more details on understanding your social security benefits, you can check out this video right here that explains the different options. Social Security – Are You Getting All The Money You’re Owed?

What does your dream retirement look like, and what’s stopping you from achieving it?

Mind the Gap

After calculating your monthly expenses and income sources, is there a gap between the two numbers? That gap represents an income shortfall you’ll need to address through additional savings or income streams.

This is the topic of our upcoming video and blog, so be sure to follow and subscribe for this valuable information to come to you.

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Remember, you don’t need to work longer; you just need a better plan. If you found this blog post helpful, we’d love to hear your thoughts.