As retirement nears, the financial gears start shifting. Rather than simply accumulating money to fund your retirement, you’ll soon be spending it.
The transition can be “pretty scary,” said Beth Gamel, a fee-only planner with Pillar Financial Advisors in Waltham. Not only do most people have to replace their regular paychecks with savings, they need to stretch those dollars over a retirement that may last 30 years or more.
Then, too, there are variables — pensions, health, kids, local cost of living, family wealth, market performance, tax laws, and even the type of retirement accounts where you keep your money. Each one can significantly alter the planning landscape, requiring individual tailoring to make the numbers add up.
That’s why advisers say coming up with a realistic plan means going back to the basics, starting with cash analysis.
“You really have to know what you spend,” said Gamel. If possible, people should start tracking expenses a year or two before retirement to get a realistic annual figure, she said. Next calculate assets and liabilities to come up with the total amount of money available in retirement. Finally add up the income from other sources such as pensions, Social Security, or ongoing employment.
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