A sound financial plan can be the difference between meeting ones retirement objectives and facing the discouraging surprise of one caught unprepared and with too little time remaining to change their financial course. At the very least, ongoing retirement planning will help you understand the financial demands of retirement, and make those decisions that are best suited to applying limited resources to potentially unlimited demands. Almost everyone needs less money during retirement than before. How much you need during retirement will be a function of your personal spending habits. For many, their mortgage will be paid off either by the time they retire, or within a matter of a few years after retirement, reducing housing expenses.
Many retirees find themselves in a lower income tax bracket.
This is due, in part, to having their main sources of income change from fully taxable earned income to tax advantaged income sources. Once you have estimated your target retirement income, you are ready to begin to evaluate what sources of income will be available to you to meet your monthly needs. Generally speaking, your sources of retirement income fall into three categories, which we will discuss below. Social Security is available to everyone, but the amount you receive will be based on how much you earned during your working years. Company Sponsored Plans.