Watch Your Retirement Budget 

By Dustin Graham

Jan 1, 2019

Congratulations! You’ve made it to retirement and your Golden Years! You're going to sit back, relax, enjoy the sunshine and reflect on life so far. With all the challenges you’ve overcome and accomplishments you’ve earned, it’s time to enjoy the fruits of your hard work!

The current trend among retirees isn't to just sit back and relax. Retirees are traveling, starting businesses, and making lots of time for their social calendar for family and friends. This is the lifestyle you've earned and have been working towards the last 30 to 40+ years.

When I started in this business before the “Great Recession”, the rule of thumb for retirees was that you could comfortably withdraw 4% of your assets each year, and you wouldn’t need to fear running out of money in your lifetime.

However, this 4% rule is proving to be obsolete. Studies are showing an increasing trend that new retirees are spending (drawing down) close to an average of 7% of their assets each year! That's an incredible demand for your account to keep pace, which can pose an incredible problem in the future.

Here are some of the reasons that equate to needing more money nowadays:

1.  New retirees aren’t downsizing homes. In fact, they're doing the opposite, opting to find their dream "forever home" that they’ve always wanted.

2.  Fixed interest and traditionally safe assets aren’t yielding enough to keep up with your demand for cash.

3.  Market volatility – Stock market ups and downs over the last decade are causing future projections to be unreliable.

4.  Healthcare costs – Our retirement years are often the most expensive years. It's common for us to see retired families with close to 25% of their income going to medical expenses.

5.  Long Term Care costs – In 2027, only 9 years from now, Genworth projects the monthly cost of a private room in a nursing home to exceed $11k per month!

6.  Taxes – When you live off of your retirement assets in 401k's, IRA's and other qualified plans, withdrawing money is considered income. When your income reaches a certain level, your social security benefits also become taxable. As a married couple, having just $32,000 or more of annual combined income will result in 85% of your SSI benefits to be taxed.

We’ve consulted with thousands of retired families across the country. We’ve done the field research. Here’s what we’ve found. Our firm believes the best way to retire is the same as the best way to create wealth. Control your expenses and create enough monthly income that allows you to live below your means. Invest for the future, with responsibility.

If you feel you could fall into this situation, we want to talk to you. If you need to create more income that you won’t ever lose, we want to talk to you. If you have concerns about taxes and want to find ways to create more tax-free income when you need it most, we'd enjoy meeting with you.

Are you prepared financially for retirement, preserving your legacy, or a medical emergency?