Why Nurses should be thinking about retirement today?

Like most people, when you conceive planning for retirement, you probably picture a figure. The actuality is that nearly everyone thinks in terms of an account balance when they retire. People who own businesses think about selling their businesses and getting a lump sum for it. Nevertheless, we have a tendency to budget for expenses every month when we are still working while business owners think in terms of the income they earn monthly. It shouldn’t be any different in retirement.

For business owners especially, they find it difficult to think about retirement as a monthly income since most of them reason that they work very hard to succeed in business so they can secure their retirement and also build wealth. They view the business as the account balance when they retire. However, the only way this works is if the business wealth can be monetized and transformed into personal wealth.

In our world today, the major employer-sponsored retirement plan is the 401(k) Plan. Individuals must think of retirement in terms of monthly income. All through our working lives, our financial mindset was based on monthly expenses (i.e., rent, phone bills, mortgage, business loans, car payments, etc.). In addition, the monthly budget factors in the activities we take pleasure in to maintain our living standard (e.g., golf, movies, vacations, restaurants, etc.). Having a lump sum or an account balance makes no sense unless it can be broken down to cover monthly expenses throughout retirement.

Will your present retirement plan account balance provide you with adequate income to cater for your monthly expenses when you retire? What is the guarantee that your existing retirement plan will make sure you have enough money all through retirement? On average, a 65-year old is expected to live another 20 years. The implication is that nearly half of them will outlive that. For the average 65-year-old couple, there is a 50% probability that one of them will live to 92 and a 25% chance that the other will live to 97. People who are older also think of their mortality but refuse to peg a year to it.

A lot of studies have shown the amount of money one ought to have for retirement – 70%, 85%, 90% of final compensation, to enable them to live comfortably. Studies have also shown how much of your account balance you ought to take out – 2%, 4%, 6%, derived from different models, to make available a retirement income without the need to outlive the balance.

What’s the amount you need? How can you tell exactly? Does this bother you?

Irrespective of whether you are a business owner or you partake in a retirement plan sponsored by an employer, or both, evaluating your individual situation, as well as the people in your professional and personal life with a financial expert are extremely important.

SOURCES:

1 – https://www.aging.senate.gov/imo/media/doc/hr222pb.pdf

Written by 3rd Independent party

2017-40571  Exp. 10/17