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.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
24/7 market commentary from Jim Cramer and 20+ veteran Wall Street gurus. Get access to the latest trading ideas on stocks, options, and ETFs as well as a real-time forum to see the pros exchanging their investment ideas.
- Jim Cramer + 20 Wall Street pros
- Intraday commentary & news
- Real-time trading forum
- Actionable trade ideas
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV