Retirement News : Seniors : How to Remain Cash Flow Positive in Retirement

How to Remain Cash Flow Positive in Retirement

Date Added: 19-05-2005

It's a wonderful life, as the saying goes.
As we grow older, we have time to appreciate the more important things: family, friends, a beautiful sunset, a colorful garden. One reason why we have that time is because people are living longer than ever before. The National Center for Health Statistics reports that, today, a 66-year-old is expected to live to age 82. With the possibility of living 17 years in retirement, or more, retirement planning becomes a very important issue. And, planning for the 'average' retirement may not be adequate for healthy people with a family history of longevity. According to a New York Times Magazine, retirees over 65 have enjoyed an increase in median income of 170 percent since 1947, mostly because of Social Security benefits. That increase was just 49 percent for the general population. Still, the more years spent in retirement, the more income retirees will need to maintain the lifestyle they want.

That means staying ahead of inflation and taxes. If your retirement nest egg is in a fixed-income investment, it may not keep up with inflation. It's simple arithmetic. An asset returning 5 percent with inflation at 4 percent has a real return of only 1 percent.
To put it another way, if you need an annual income in retirement of $50,000 to enjoy your present lifestyle, you'll want an annual income of more than $74,000 in 10 years, assuming an annual inflation rate of 4 percent. At the same time, you may also want to provide money for a charity, or for someone special such as a partner or children when you pass away. Of course, expenses change after retirement - costs such as dry cleaning and commuting go down, and you may no longer have a mortgage.

On the other hand, cost for home repairs, travel, hobbies, and other fun may go up. Although all but 1 percent of Americans 65 and over are covered by Medicare or other health insurance, medical expenses can increase dramatically over when an employer plan paid much of the health care premiums.

If you're like most retirees, you have purchased Medigap insurance, and you may be paying for prescriptions and eye care out of your pocket.

There are many financial software programs, tools and Service available for calculating retirement cash flows - that is, money coming in, going out, and it's effect on a household's total nest egg. Many have inflation and tax calculators. Because tax laws change so rapidly, however, it's important to use the most current versions of these programs.

It's a wonderful life, as the saying goes.
As we grow older, we have time to appreciate the more important things: family, friends, a beautiful sunset, a colorful garden. One reason why we have that time is because people are living longer than ever before. The National Center for Health Statistics reports that, today, a 66-year-old is expected to live to age 82. With the possibility of living 17 years in retirement, or more, retirement planning becomes a very important issue. And, planning for the 'average' retirement may not be adequate for healthy people with a family history of longevity. According to a New York Times Magazine, retirees over 65 have enjoyed an increase in median income of 170 percent since 1947, mostly because of Social Security benefits. That increase was just 49 percent for the general population. Still, the more years spent in retirement, the more income retirees will need to maintain the lifestyle they want.

That means staying ahead of inflation and taxes. If your retirement nest egg is in a fixed-income investment, it may not keep up with inflation. It's simple arithmetic. An asset returning 5 percent with inflation at 4 percent has a real return of only 1 percent.
To put it another way, if you need an annual income in retirement of $50,000 to enjoy your present lifestyle, you'll want an annual income of more than $74,000 in 10 years, assuming an annual inflation rate of 4 percent. At the same time, you may also want to provide money for a charity, or for someone special such as a partner or children when you pass away. Of course, expenses change after retirement - costs such as dry cleaning and commuting go down, and you may no longer have a mortgage.

On the other hand, cost for home repairs, travel, hobbies, and other fun may go up. Although all but 1 percent of Americans 65 and over are covered by Medicare or other health insurance, medical expenses can increase dramatically over when an employer plan paid much of the health care premiums.

If you're like most retirees, you have purchased Medigap insurance, and you may be paying for prescriptions and eye care out of your pocket.

There are many financial software programs, tools and Service available for calculating retirement cash flows - that is, money coming in, going out, and it's effect on a household's total nest egg. Many have inflation and tax calculators. Because tax laws change so rapidly, however, it's important to use the most current versions of these programs.

It's a wonderful life, as the saying goes.
As we grow older, we have time to appreciate the more important things: family, friends, a beautiful sunset, a colorful garden. One reason why we have that time is because people are living longer than ever before. The National Center for Health Statistics reports that, today, a 66-year-old is expected to live to age 82. With the possibility of living 17 years in retirement, or more, retirement planning becomes a very important issue. And, planning for the 'average' retirement may not be adequate for healthy people with a family history of longevity. According to a New York Times Magazine, retirees over 65 have enjoyed an increase in median income of 170 percent since 1947, mostly because of Social Security benefits. That increase was just 49 percent for the general population. Still, the more years spent in retirement, the more income retirees will need to maintain the lifestyle they want.

That means staying ahead of inflation and taxes. If your retirement nest egg is in a fixed-income investment, it may not keep up with inflation. It's simple arithmetic. An asset returning 5 percent with inflation at 4 percent has a real return of only 1 percent.
To put it another way, if you need an annual income in retirement of $50,000 to enjoy your present lifestyle, you'll want an annual income of more than $74,000 in 10 years, assuming an annual inflation rate of 4 percent. At the same time, you may also want to provide money for a charity, or for someone special such as a partner or children when you pass away. Of course, expenses change after retirement - costs such as dry cleaning and commuting go down, and you may no longer have a mortgage.

On the other hand, cost for home repairs, travel, hobbies, and other fun may go up. Although all but 1 percent of Americans 65 and over are covered by Medicare or other health insurance, medical expenses can increase dramatically over when an employer plan paid much of the health care premiums.

If you're like most retirees, you have purchased Medigap insurance, and you may be paying for prescriptions and eye care out of your pocket.

There are many financial software programs, tools and Service available for calculating retirement cash flows - that is, money coming in, going out, and it's effect on a household's total nest egg. Many have inflation and tax calculators. Because tax laws change so rapidly, however, it's important to use the most current versions of these programs.

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