Let’s review my five retirement planning steps in case you missed any…click on the Steps to go to the appropriate Step.
Step 1 – Total all retirement accounts.
Step 2 – Estimate how much social security might provide.
Step 3 – Estimate what the IRS standard deduction might be during my retirement years.
Step 4 – Estimate what tax bracket will apply to my situation.
Taking all the info then dumping into a spreadsheet to calculate what my retirement might look like is the next step. Here is my progress so far.
TWO MAIN CONCERNS
The primary concern of any person retired is running out of money. There are plenty of stories of retired people running out of money and having to choose between heating their home or eating and according to this article in the Wall Street Journal, the fastest growing group of homeless are ill-prepared baby boomers. Here is a quote….
“Faced with a rent increase of more than $500 a month, Schroeder, who had little savings and was living month-to-month on Social Security, moved out and started couch surfing with friends and acquaintances. She called hundreds of other landlords in Naples and southwest Florida but failed to find anything more affordable. She applied for a low-income housing voucher. She began eyeing her 2004 Pontiac Grand Am as a last resort shelter. ‘I never though, at 71 years old, that I would be in this position,’ she said.”
Personally, my two main concerns are whether social security will be around and what the tax brackets might be when I retire. The tax rates right now are historically low. The tax brackets for most of modern America’s history were in the 70 to 90 percent range! You can review them here.
It is a foregone conclusion that expenses, thru inflation, will go up so property taxes, insurance, utilities and food costs will rise so this too needs to be incorporated into any planning.
I am building my spreadsheet now and everything I think I’m done I find that I need to tweak it so I’ll keep pecking at it until I feel I have a good model. Which one of the images above or below will be me in the future?
Click here to go back to Step 1.
