The reality is that for most people their expenses drop by ~ 10% per decade in retirement. Is not what you’ll be spending next year or in 10 years. There is an interesting movement called Financial Independence Retirement Early (FIRE) – the FIRE Community has some great lessons for traditional retirement people around being frugal/efficient and mindful. Read up on how Medicare and Medicare Supplemental Insurance work. Out of pocket healthcare costs for a 65 year old couple are more than double what the average household has saved. Budget for Out of Pocket HealthcareĬonsider health care and insurance costs. Consider where you want to live, since that is a huge driver of taxes and expenses in retirement – here are some lower cost/higher quality of life places in the US, and here are some places to retire abroad. Get rid of bad debt (credit card, car payments, student loans – ideally pay off your mortgage). Build a budget, go through all of your expenses – especially recurring expenses. Take a hard look at your expenses and find ways to get as efficient as possible – this is a huge driver of how much you need in retirement. From a risk management perspective – try to get the “need to live on” amount as low as possible. In order to set your withdrawal plan you first need to know how much you’ll need and want. Here are five steps to decumulation – a retirement drawdown strategy: 1.
Ira drawdown calculator how to#
How to decumulate, or drawdown, and generate retirement income in a tax efficient way is a complex topic that is starting to get more attention. Most of the financial services industry has been focused on helping people accumulate or save and invest (and their business models are built on this). Having a sound retirement drawdown strategy and keeping to it is crucial if you want to be able to live comfortably in retirement and not spend time worrying about outliving your savings. If you’re reading this, you’re likely someone who: saves money, has built up some assets, and is starting to think about how to create a retirement drawdown strategy – a plan for how to turn your assets into income that will last for life.