SETTING RETIREMENT GOALS & CREATING A BUDGET

^{By Louis Green, CFA®, CFP®, CRPS®}

Setting Retirement Goals

Financial planning is the foundation of a successful retirement. Creating and sticking to a financial plan is one of the best ways to start planning for your future. However, how do you know where to start? Start by setting your retirement goals. How much income will you need in retirement? What do you want to accomplish in retirement? Where do you want to live? What activities do you want to participate in? Are you looking to make a major purchase? If so, when and how much will it cost? How often do you want to travel? Do you feel travel is a necessity or something that is nice to do?

How about your hobbies? Whether you like to cook, dance, golf, or collect vintage wine, make sure to include a line in your budget for your hobbies.

Creating a Budget 

Before you create a budget, start by creating a balance sheet and cash flow statement to capture your assets, liabilities, income, and expenses. These numbers will help you determine your current spending and net worth.

Next, create a budget that reflects your ideal spending. Some of your expenses (food, mortgage, medical etc.) are essential and probably can’t be reduced. However, you might have some room to reduce discretionary expenses. Check your mortgage rate or the interest rates on any other loans you have to explore refinancing opportunities. Use a spreadsheet to track your actual spending versus your budget. Are you spending what you expected to spend? If not, why? Your next step is to project those expenses through retirement using a reasonable inflation rate. See the historical inflation rate below.

Consumer Price Index¹    

Let’s Talk

Find out how Prestiq Wealth can help you create a comprehensive financial plan based on their book, 5 Steps To Retirement Planning.

LET'S TALK

All advisory services are offered through Savvy Advisors, Inc. (“Savvy Advisors”), an investment advisor registered with the Securities and Exchange Commission (“SEC”).

1 https://tradingeconomics.com/united-states/inflation-cpi