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Preparing for Retirement - Part 1

Preparing for Retirement - Part 1

| November 01, 2023

If I were to ask you “How are you preparing for retirement?” What would you say? Would you immediately freeze and panic or would you feel confident in the numbers you saw when you recently checked your retirement balances? 

The truth is that there is a lot that goes into retirement planning. It isn’t just about knowing what your retirement account balances are, it’s actually about a lot more than we can even cover in these blogs. This month I am going to give you a high-level look at how you truly prepare for retirement, what goes into it, and what you can do to prepare even if you are already retired and left some things out.

At the heart of retirement planning is the ongoing battle to maintain the purchasing power of your money which can ensure that you won’t outlive your retirement savings. Although a lot more goes into retirement, this is the point at which everyone needs to start, and where we will start this month. We will discuss the realities of longevity, the role of the cost of living in retirement planning, the resources needed to calculate your income needs, and more. Let’s get started with a big old open-ended question.

What is money?

Quite simply, money is purchasing power. Which brings us to another question.

What is the goal of retirement planning?

To keep retirement income growing as your cost of living continues to grow so that we don’t outlive our retirement savings

If history is any guide – and it’s just about the only guide we have – each year our cost of living goes up. So the challenge of retirement becomes trying to keep our income growing at least at the rate our cost of living is inflating, so as to be able to sustain our lifestyle without running through our principal. One might argue we fight this battle all our lives, not just in retirement. 

However, in retirement, we are in charge of our own income because it is the money we save in our earning years. It is both our challenge and our goal to create income that is dynamic and can rise enough through time to offset inflation. This means that the critical issue in retirement is not so much how much you have saved, although that is extremely important, but the direction your savings/income is going.

Even if your fixed income is above your income needs in Year One of retirement, your costs immediately start catching up. The danger is when your cost of living rises above your income line, that is when retirees start running out of money. And, this is where our ever-increasing longevity comes into play. Even if you can’t foresee being in retirement for 30 years, the chances that you will be get stronger every day. In fact, the joint life expectancy of a non-smoking couple retiring at age 62 is 30 years…age 92.1

So how do we prepare for a long retirement, keep our income growing at least at the rising rate of the cost of living, and prevent ourselves from outliving our money? 

We start by figuring out our number, which we will learn more about in the coming weeks..

Until next time…

One last thought: We believe an educated investor is an empowered investor. If you like what you’ve read and think your friends and family can benefit as well, please share.


1 What Is Retirement Planning? Steps, Stages, and What to Consider 

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. All performance referenced is historical and is no guarantee of future results. All indices are unmanaged and may not be invested in directly. 

All investing involves risk, including loss of principal. No strategy assures success or protects against loss. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

Dollar-cost averaging involves continuous investment in securities regardless of fluctuation in the price levels of such securities. An investor should consider their ability to continue purchasing through fluctuating price levels. Such a plan does not assure a profit and does not protect against loss in declining markets.