Have you ever been driving to a destination and found yourself wondering if you had enough fuel to complete the trip? It is a very unsettling and stressful feeling and does not make for an enjoyable journey, for either the driver or the passenger(s). This same emotional distress and discomfort underlies a retiree’s fear of running out of money.
The point is to ensure that you are making the decision to retire from a position of financial confidence and comfort. It’s critical to have a formal income plan, or blueprint, show what your assets can realistically be expected to provide in terms of sustainable cash flow. After all, it is your cash flow that will fund your lifestyle. Granted, there are many things that change as one moves through retirement. Hence the need for reviewing, fine-tuning and occasionally redoing the blueprint.
You can comfortably decide to retire if:
- you have sufficient assets and benefits to create the income you need to provide the lifestyle you want, and
- the income can be sustained throughout your retirement
You could consider retiring into a somewhat more conservative and less expensive lifestyle. This would require less cash flow and could help to extend the life of your income-producing assets such that you can retire now. Another option would be to still focus on your original lifestyle objectives and simply work longer to build up additional retirement assets. It really does come down to a personal assessment because every situation is unique.
Everyone (and every couple) has their own:
- reasons for wanting to retire
- lifestyle objectives
- priorities and preferences
- cash flow needs and time frame
- income-producing assets and benefits to create income
- family issues
- state of health as they enter retirement
The factors listed above are exactly why you need to have a blueprint. It will allow you to design what you wish to do and understand the financing required to do it. From there it becomes a function of executing the plan and doing so in the most efficient manner possible.