Steps Toward Achieving Your Retirement

Michael Orecchio |

Step 1 - Determine Your Cost of Retirement

Achieving your retirement objectives will not happen automatically. The first step to consider as retirement approaches is to determine your cost of retirement. Your cost of retirement will be affected by many factors. Three of the most significant are:

  • Your monthly retirement living expenses
    A common rule of thumb is somewhere between 70% and 100% of your annual earned income prior to retirement.
  • Your retirement age
    This is the age at which you plan to stop working full time and start accessing your retirement portfolio assets. 
  • Your life expectancy
    This will define how many years your retirement costs will continue to be incurred.

Step 2 - Apply Your Income Sources

Once your cost of retirement assumptions have been defined, you can start to look at the income sources that may be available to you in retirement to help offset your retirement costs. Income sources may include among other things:

  • Social Security
  • Pensions
  • Immediate annuity payments

Step 3 - Withdraw from Your Portfolio Assets

Once your available income sources have been applied to your cost of retirement, you can take withdrawals against your portfolio assets to make up the difference. Portfolio assets commonly include:

  • Brokerage accounts
  • Money Market accounts
  • 401(k)s, 403(b)s, and other employer-sponsored retirement accounts
  • IRAs
  • Annuities

Step 4 - If Necessary, Consider Changes
If you determine that you are not on track to achieve your retirement objectives, you will need to consider making some changes. These changes may include:

  • Saving more before you retire
  • Redefining your retirement age
  • Considering part time employment during retirement
  • Spending less during retirement
  • Combination of above