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The question that everyone asks the first time they walk in our office is do I have enough money for retirement? We think the answer to this question is one of the most important you will need as you move through your financial life.
Before we can answer the question about having enough money, we need to know some information. Some of the things we need to know are:
At what age do you want to retire?
Do you plan to work part time after you retire?
Are there any inheritances you will be getting?
How much money have you saved to this point?
How much money do you save on an annual basis?
Does your employer offer a 401(k) program?
What level of social security do you think you will get?
How much money do you spend now and how much money will you spend in retirement?
Do you have any extraordinary expenses that will arise in the future such as educating your children?
These basic questions allow us to answer the bigger question: When will I be able to retire?
How much do you spend?
Usually the most challenging part of putting together a financial plan is finding out how much money our Clients spend on an annual basis. We find that many of our Clients will often overestimate how much money they earn and underestimate how much they spend on an annual basis.
The only way we can be sure that we have an accurate accounting of earnings is by looking at your tax return. We find out how much money you spend by having you provide us with a full itemized listing of your annual expenses.
Some Clients use Quicken or Microsoft Money to track their personal finances. In that instance you would just need to provide us with a cash flow statement. Most Clients dont use those programs so we ask all people in the relationship who spend money on family issues to go through their checkbook for the last year categorizes each check they wrote. Its also important for you to track any ATM and debit card withdrawals you might have had.
Going through your checkbook may sound like a lot of work. In reality we find that most of our Clients can do this entire exercise in two to three hours. You probably will learn things about your spending patterns that you were not aware of.
Retirement strategies
When we enter spending and saving patterns in our financial planning system, we sometimes see a problem with the age that our Clients want to retire. For example, if a Client wants to retire at 55 years old, they might have to dramatically change their lifestyle to do so. Most people we know are not interested in seeing their standard of living be lower in retirement than while they were working.
The options that are available are either delaying retirement or increasing the rate of savings. We sometimes see that Clients are not taking advantage of the match their employers offer through their 401 (k) program. This match is free money. You only get it if you participate in your 401(k) program. We highly recommend that you not only participate in your 401(k) program but maximize the match your employer may provide.
Paying off your mortgage before you retire is often very important in your long-range plans. For some people their mortgage may use as much as 35 to 40% of their annual cash flow. If your mortgage is paid off before you retire, you will need just that much less money for annual expenses.
Planning for retirement is a complicated process. The financial professionals at Stage 2 Planning Partners are trained in using processes and software to help Clients understand their own particular needs when it comes to retirement planning. We strongly encourage you to have a conversation with one of our financial professionals to talk about your personal retirement needs.
If you would like more information or support from our firm, please visit us online or e-mail us and your Stage 2 Associate will get back to you.
With Warm Regards,
Stage 2 Planning Partners
Josh Patrick © 2006
Securities and Investment Advisory Services offered through NFP Securities, Inc., A Broker/Dealer, Member NASD/SIPC and a Federally Registered Investment Advisor.
Stage 2 Planning Partners is an affiliate of National Financial Partners Corp., The parent company of NFP Securities, Inc. Representatives listed on this website are currently registered to conduct securities business in the following states: AZ, CO, CT, FL, IL, IN, MA, MT, NC, NH, NY, PA, RI, VA, VT, WA
NFP Securities is not affiliated with Harris- Murray
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