For those of you who are older than age 50, we ask that you think about how your life and lifestyle changed in the thirty years between your 20s and 50s. If you’re in your 20s, you will have to take our word for it. But if you are in your 30s or 40s, then you can probably imagine what we are talking about. Your life and lifestyle has or will change quite dramatically between your 20s and your 50s.
Doesn’t it make sense then, that your lifestyle and needs will also change quite considerably between your 60s and your 90s? It is quite conceivable that a 55 year old couple, planning for their retirement, should have a thirty to thirty-five year time horizon. Statistics predict that at least one of them will live to be age 90.
Your retirement plan must be flexible enough to cover your evolving needs over this time. For most people there are four needs during retirement: basic living needs, lifestyle needs, health care needs, and finally your legacy. Properly funding these expenses is the answer to a successful retirement plan.
Your basic living needs include items such as food, utilities, shelter and personal care. Funding these basic living needs well will create a solid foundation for your retirement plan. These costs may be relatively stable and predictable, although they will be subject to moderate increases due to inflation. Remember that a $100 basket of groceries today will cost $324 in 30 years using a 4% inflation rate.
Most new retirees have big plans for their new life of leisure. Life can be exciting as you discover new experiences, take on new hobbies, make new friends, spend more time travelling, or just live your own personal retirement dream. Proper funding for your lifestyle desires is vital for a happy retirement.
Later in your retirement years, your health may begin to affect your lifestyle. You may not be able to travel as much or do the things that you could when you first retired. However, the need for income does not always change. You may need to divert money that you were spending on lifestyle needs to cover the extra costs health care that are not covered by government plans.
Regardless of the actual size of your estate, most retirees have a desire to leave a financial legacy, either to family members or charitable organizations. The success of your retirement plan to fund the cost of your basic needs, lifestyle needs and health care needs will determine your ultimate legacy.
The foregoing is for general information purposes and is the opinion of the writer. This information is not intended to provide personal advice including, without limitation, investment, financial, legal, accounting or tax advice. Please call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., to discuss your particular circumstances or suggest a topic for future articles at 613-798-2421 or E-mail email@example.com. Mutual Funds provided through FundEX Investments Inc.