This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Four Money Questions to Answer Before Retirement

NEW YORK ( AdviceIQ) -- Every now and then you probably ask yourself, "When should I retire?"

Is it simply a matter of finances? Or do you retire when you've "had enough" and are simple unwilling to take it anymore? Of course, there is no one answer for everyone. But you can ask yourself the following four questions and easily come to a better-informed conclusion:

1. How much does it cost you to live on average each month?

Before you quit your job, find out if you have the money to start living the life of Riley or not. And to determine if you have enough money to retire , you must first know what it costs you to live.

If you track your spending or use my " 5 Minute a Month" method to monitor your cost of living, you already have a good sense of it. Just take your current average spending and use an Internet calculator to factor in inflation. Since the average inflation is about 3.2%, that's the number I suggest you use.

If you don't know what it costs you to live, there is no way you can determine if you have enough money to retire. So if this is an important question for you, start tracking now. Do not go to step two unless you know what it costs you to live, please.

2. How much passive retirement income (pension and Social Security benefits) will you have?

Once you know how much money you need to retire, the next step is to see how much money you actually will have. This part of the exercise is pretty straight-forward. Just get the figures from your human resources department and the Social Security Administration.

3. Will you be able to create enough income from your portfolio to make up the difference?

When you retire, you probably will need to dip into your savings. Don't feel bad about that. That's why you worked so hard and that's what it's there for. The question is, how much can you withdraw ?

For argument sake, let's say you have $500,000 saved and plan to draw 4% from that account each month. That's $20,000 a year you can count on as portfolio income.

1 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AAPL $132.03 1.90%
FB $80.55 1.50%
GOOG $539.80 1.40%
TSLA $247.43 -0.01%
YHOO $43.39 1.30%

Markets

DOW 18,162.99 +121.45 0.67%
S&P 500 2,123.48 +19.28 0.92%
NASDAQ 5,106.5930 +73.8420 1.47%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs