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How to Project Retirement Income Needs With Inflation

We need to make sure that when we retire we have enough income to live. A key component that many people neglect is inflation. Inflation can erode our retirement nest egg quickly unless we prepare for it.

Instructions

    • 1

      Select a financial representative to assist you in retirement planning. Do this now, no matter your age. You are never too young to begin saving for retirement.

    • 2

      Go over your present expenses. Remember that many of your expenses will disappear when you retire. For example, you will no longer need to put a portion away for retirement. You may also have your mortgage paid for, so consider these factors.

    • 3

      Choose how much you will spend on food, living expenses and health care. Remember you may have to pay more for your health insurance after retirement. Ask your company representative to work up that figure for you.

    • 4

      Add up your living costs. Put these figures into a calculator. Choose a rate for inflation.

    • 5

      Use the US inflation rate (see Resource section for a link to historic and current inflation rate of US). Use this information to determine what inflation rate to use in order to project retirement income.

    • 6

      View the inflation rate information. This varies monthly, so take the average and use this figure to project your retirement income needs.

    • 7

      Review your retirement portfolio annually. Make adjustments as needed. Increase or decrease the inflation rate according to the current rate of inflation. Make sure you will have the retirement funds you need for your retirement.

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Comments

  • sanserve Oct 08, 2008
    Good News for Income Investors! Retirement Income Investing and Your Portfolio First, the good news: From June 2007 through September 2008 (i.e., during the credit crisis) Income CEF payouts per share were virtually unchanged. From June 2008 through September 2008, payouts rose slightly--- 29 funds raised their payouts and 17 lowered them. Your portfolio spending money should be higher than it was a year ago. Brokerage firm monthly statements are designed to promote either fear or greed, depending on the current market environment. Nowhere on your statement can you find numbers that report your net investment, your total working capital, or your true asset allocation. Current and projected income numbers are given little attention, and monthly withdrawals are treated like losses of principal. Income portfolios are reported upon using the same format as growth portfolios, and
  • sanserve Sep 09, 2008
    Inflation need not be as big a problem as you might think... Retirement Income Investment Planning - Step One Your retirement income investment plan starts now, right now, no matter how old or well heeled you happen to be. Step One is to understand what a retirement plan is, and to identify the three large numbers you need to keep track of while you are developing your stash. With these three totals on your spreadsheet, it's much easier to develop long-range retirement income goals that make personal sense. A retirement plan is an income production plan. Guaranteed retirement income - projected expenses = the gap. No gap, add parents and children to the expense number. There's always a gap. Employer provided pension plans, Social Security, and (always much too expensive) fixed annuity contracts, are retirement income providers. They are monthly income machines that you have
  • sanserve Sep 09, 2008
    Inflation need not be as big a problem as you might think... Retirement Income Investment Planning - Step One Your retirement income investment plan starts now, right now, no matter how old or well heeled you happen to be. Step One is to understand what a retirement plan is, and to identify the three large numbers you need to keep track of while you are developing your stash. With these three totals on your spreadsheet, it's much easier to develop long-range retirement income goals that make personal sense. A retirement plan is an income production plan. Guaranteed retirement income - projected expenses = the gap. No gap, add parents and children to the expense number. There's always a gap. Employer provided pension plans, Social Security, and (always much too expensive) fixed annuity contracts, are retirement income providers. They are monthly income machines that you have

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