When planning for your retirement, it’s easy to get lost in the details. After all, for most people retirement will last 20 years or more. If your retirement goal is to have a reliable income regardless of how long you live and what happens in the economy, there are four basic steps to help you achieve this goal.
Step One: Develop Sources of Reliable Income
The main sources of income for most includes Social Security, pensions, income from retirement savings (such as 401k plans and IRAs), work income, and income from home equity. Any one of these streams alone most likely will not be enough for you to live comfortably on. As a result, you will need to piece together income from a variety of these sources to meet your need.
Step Two: Manage Your Living Expenses
For many, the majority of their living expenses are made up of housing, transportation, food, medical and entertainment costs. While spending less is good, you need to focus on what truly makes you happy. Once you do this, you will be able to better determine in what areas you can afford to spend less and which ones you will spend more.
Step Three: Protect Yourself When Things Go Wrong
Life will throw you a curveball. It’s best to plan and be prepared for them now before they happen. While the list of curveballs life can throw at you, the most common events that you should protect against are high medical bills, long-term care expenses, poor health, investment losses, and death of a spouse.
Step Four: Plan for a Good Life
At the end of the day, the goal is to be happy so make sure you know what makes you happy. For many, satisfaction with life involves meaningful relationships with family and friends, helping others, learning new things, volunteering, and/or applying your skills and experience in a way that’s consistent with your values.
While you control many of the overall themes presented above, a good financial advisor can work with you on the details. Doing so will help provide you the support you need to reach your financial dreams.