Tennessee-based finance professional Chester “C. Edziu” Pacana serves as a managing agent and conservative wealth management planner at DeRosa & Associates Inc. As such, Chester Pacana manages annuity and insurance agents in Tennessee and Florida and maintains a strong working knowledge of varying retirement strategies and savings plans.
Figuring out what you need for retirement is complicated and involves the honest evaluation of your total income and monthly expenses.
To start, add up the total amount of money you bring in each month. This income may be in the form of your after-tax pay from work, investment income, and other income sources. However, you must remember that certain income sources are removed once you retire. Work income, for example, will stop after retirement, but Social Security income will begin.
You must also add up the total amount of money you spend on bills and other debts every month. Don’t forget to include monthly estimates for food and entertainment, among other things.
Once you have an idea of how much you need each month, take into consideration your retirement goals and normal increases in salary and inflation. On average, you can expect that your salary will rise by about 2 percent annually. The inflation that will affect your expenses, by contrast, will increase by about 3 percent annually. Considering such increases will give you a better idea of how much you’ll need when you actually retire.
Further, you must consider changes in your lifestyle once you retire. For instance, if you plan on traveling for several weeks or months at a time, your expenses in retirement may be higher than at present.
