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Retirement Resources

Retirement Resources

Retirement Resources

Consumer Education Program


What is retirement? The day you end your career at “the company”? The day you receive your first Social Security check or take your first IRA/401K withdrawal? Some other event? Probably not. Today's Americans, more than previous generations, view retirement as an active journey filled with new opportunities.

Americans who make it to age 65, for example, have a great chance to live well into their eighties — that's what the census statistics show. That means many people will experience “retirements” that last as long as “working careers.” Enjoying those years is just one reason to start planning ahead.

Read the articles provided below to learn more!

How Much Money Will You Need to Retire?

Determine the Income You Will Need

A good way to make an accurate estimate of how much income you'll need is to keep track of your current living expenses for at least six months or as much as a year. This can help you project the amount of income you'll need in the future.

You should take into account that certain expenses will probably decrease (or go away entirely) and others will increase. Be sure to estimate these expenses for both you and your spouse. Here are some examples:

Decreasing expenses:

  • Commuting costs and business travel.
  • Union and/or professional dues
  • 401(k) plan contributions and Social Security tax deductions.
  • Business clothing.
  • Work-related social expenses.
  • Certain automobile expenses.
  • Income taxes.
  • Mortgage payments (depending on the duration of your mortgage).
  • Child-rearing expenses.

Increasing expenses:

  • Travel, entertainment, and hobbies.
  • Medical and dental expenses.
  • Medigap health insurance premiums.
  • Long-term care insurance.
  • Gifts to family members (particularly if you choose to use gifts in your estate planning).
  • Volunteer expenses.
  • Care of elderly parents.

After you have a good estimate of all projected annual expenses for including "discretionary" expenditures, estimate the total amount you (individually or as a couple) will need for annual income.

Next, you need to estimate for how many years you will need that annual income. At what age do you plan to retire? 65? Earlier than 65? Later than 65? When does your spouse plan to retire? Also consider your life expectancies. Do family members routinely live into their 90's? Estimate the number of years you'll need income. Multiply the yearly income by the number of years. This will give you a rough estimate of the total amount you may need.

Remember that inflation over the years will increase the annual income that you will need to maintain the same standard of living. In recent years inflation has remained fairly low: since 1995, rates of inflation have ranged from 1.6% to 3.4% annually according to the U.S. Bureau of Labor Statistics. But even that range of annual increase in the costs of goods and services increases the total income you need. You can use the DCU calculator How Much to Retire to estimate the impact of inflation at various rates.

Determine what income you will have

To determine an estimate of the total income you have given your current situation you need to gather information from several sources.

  • List an estimate of what you'll receive from Social Security.

You can get an estimate of what you'll receive from Social Security. If you're over 25, then you receive an annual Social Security Statement about 3 months before your month of birth. (For example, if your birthday is in April then you should receive your statement in January). Once you have a benefit estimate — either from your statement or from one of the benefit calculators — you can use other calculators on the Social Security web site to see how different retirement dates and situations might affect your benefits. For example, the Retirement Age Calculator shows how retiring early reduces your monthly benefit.

  • List the estimated amounts of any assured income — pensions, disability benefits, annuities, etc — you will receive.
  • List the current amount of money you already have saved.

Because you desire only a rough estimate, you may use either the total of current balances in IRAs, 401(k)s, mutual funds, and other investments or you may calculate the projected annual income they will produce at your planned retirement age by using the appropriate DCU Retirement Calculator. If you plan to continue making regular payments to any of these accounts, you may select a calculator that allows you to include that factor.

What's the total of these potential sources of income? Note that for the purposes of this rough estimate, you need just the sum of the estimated amounts you've listed.

Determine how much more you will need

You now have two figures: 1) how much you will need and 2) how much you potentially and reasonably will have on hand. The difference between the two figures is how much more you will need to save.

Financial Planning and Saving for Retirement

How Much Money Will You Need?

How much money will you need to have for the retirement you see for yourself? Where will it come from? The recent rocky economy, talk of Social Security reform, and a few high-profile pension fund failures have many Americans thinking more seriously about how they will fund their retirement. For years, financial planners have talked about retirement income as a "three-legged stool" that stands on Social Security, employer-related pension or retirement plans, and personal savings. Because they are healthy and active, more retirees are adding a fourth leg to that stool—part-time work.

Develop a Financial Plan

Financial planning for retirement is about having a plan for your money. It basically comes down to five questions:

  1. Where do I (we) want to be?
  2. How much time do I (we) have to get there?
  3. Where am I (are we) now?
  4. What investment vehicles give me (us) a chance to get there?
  5. How much financial risk am I (are we) willing to take? (See sidebar on Investments and Risk.)

The following sections take a brief look at questions 2 and 4. There are numerous sites on the Internet that offer myriads of planning tools such as savings calculators, online advice providers and planning software.

Expert Recommendations

Experts recommend the following:

  • Use tools from non-profits and those not sponsored by a particular investment company first.
  • Use more than one tool.
  • Evaluate the tools and resources by asking these questions:
    • Who is responsible for the information on the site?
    • What's the purpose of the information? For example, is it to sell you something?
    • Compare it with other sources. Are they similar or very different?
    • How old is the information?

Just remember that the output of a calculator or other interactive tool is only as good as the information that you put into it.

10 Ways to Cut Costs in Retirement

You’ve worked hard to save money for retirement, and now it’s time to enjoy this new phase of your life. But how can you make sure your money will last? Setting a budget and finding ways to trim costs can help you manage your money on a fixed income in retirement. It’s all about prioritizing your spending and focusing on what matters most to you.

Try these tips for cutting expenses in retirement:

1. Downsize your home. Perhaps you’re looking to downsize to a smaller living space with less upkeep and yardwork.

2. Move to an area with a lower cost of living. You can live on less if you choose your retirement location based on a cost of living you can comfortably afford.

3. Sell your car. Consider selling a vehicle and sharing a car if you and your partner are both retired. Or, go carless if you live in an area that’s walkable or easily accessible with public transportation.

4. Review your insurance. Your insurance needs may change in retirement, and you might be able to save money by reviewing your coverage and costs for auto, homeowners, and life insurance.

5. Travel during the off season. Save money by booking airfare and lodging in the off season, or take advantage of last-minute travel deals.

6. Shrink your phone and cable bill. Look at your monthly expenses for phone, TV, and other media. Consider cutting back on services or features you don’t really need (e.g., traditional landline, unlimited cellphone data, or premium TV channels).

7. Save energy. Conserve energy and reduce your utility bills by turning off lights and unplugging electronics not in use. Use a programmable thermostat to save energy, especially when you’re not at home.

8. Trim prescription drug expenses. Talk to your doctor about switching to less-expensive generic drugs or getting a 90-day supply rather than a 30-day supply. Comparison shop at different pharmacies to find the best prices on your medications.

9. Ask for senior discounts. Don’t be shy about asking for senior discounts at restaurants, grocery stores, museums, and more. Also take advantage of discounts offered through unions, alumni associations, AAA, and AARP.

10. Live simply. Take up hobbies that are free, such as joining a library book club or gardening in your yard. You may find that simple pleasures provide a wealth of happiness!