Blog Layout

Can you Determine your Ideal Retirement Income with a Formula?

Darryl Rosen • Sep 09, 2022

Perhaps you could do so in a simpler financial world – but as retirement comes with financial complexities, a purely formulaic approach may fall short.

There are basic calculations that may give you a “ballpark figure” for what your initial retirement income might be and your “ideal” retirement income. 

Still, they may not account for certain factors that might prompt you to spend more (or less) in a particular year.
Take inflation. 2022 has seen the highest inflation in 40 years. But not all retirement expenses may increase by that amount in a year. Some medical, travel, and leisure expenses have outpaced inflation. Another factor that makes “retirement by formula” difficult is Social Security. 

Some people file for Social Security earlier than anticipated due to health reasons or changes. When Social Security income enters the picture earlier (or later) than first assumed, that may prompt a revision to retirement income projections.

MarketWatch notes that 50% of working men claim Social Security at age 62, and almost 70% of seniors start receiving Social Security benefits before Social Security’s full retirement age (66 or 67, depending on your birthdate). 

Your retirement spending needs (both core and discretionary) are a major focus of your retirement strategy, and those needs help determine your “ideal” income

So what do you do?

I prefer going line by line through your budget to get started. Yes, it's onerous; but so is running out of money in retirement!

Here is a resource from AARP that helps you remember all the categories. Home expenses, insurance, health care costs, food and other miscellaneous ways to spend money :)

https://www.aarp.org/money/budgeting-saving/home_budget_calculator.html


You might also like

When a Spouse Dies

By Darryl Rosen • 19 Mar, 2024
When your spouse dies. 63% of the time when a spouse dies, it’s the man. According to the NIH, when this happens, on average the widow (or the wife) lives another 12 years. 3 things happen in short order when someone dies. Income decreases by as much as 50% with the possible loss of social security and pension. Taxes increase the following year because single tax rates are more punishing than married rates. If the deceased had an IRA or 401K, the widow still has to take Required min distributions but now at higher tax rates. Expenses go down but not by as much as you think. Only 20% on average per the Government Accountability Office. Think about it this way. Variable costs like medical and food, etc. will decrease but what about fixed expenses. My FIL passed in December. Jill’s Mom still has the house to contend with. All of this is to say please build these types of scenarios into your plans. If you have questions, feel free schedule some time to speak with me.

Annuities Simplified: What you need to know before buying!

By Darryl Rosen • 07 Mar, 2024
Are you looking for a reliable source of income in retirement? Annuities may be the answer! Watch this video to learn how annuities can provide guaranteed income and simplify your retirement plan. Say goodbye to financial worry and hello to a comfortable retirement!

Overcoming Financial Blunders

By Darryl Rosen • 02 Mar, 2024
Are past financial slip-ups haunting your investment decisions? You're not alone. In this insightful video, @erinkennedytv and Darryl delve into expert advice on navigating investment and financial choices after making mistakes. From acknowledging past blunders to crafting a brighter financial future, discover actionable strategies to thrive in your retirement journey.
More Posts

Contact us

Share by: