We are currently in a series outlining the retirement planning process.
In Step 1, we outlined how to create retirement goals and define the finish line in regard to
- what they are,
- how much you need,
- by when or for how long to accomplish, and
- why you want to accomplish the goal.
Step 2 in the retirement planning process is to Summarize Your Financial Resources that are available to accomplish the goals that you have defined.
There are three main sources to outline.
The first are your sources of predictable income in retirement. The most common sources of predictable or guaranteed income include Social Security, pension, annuity, and rental income.
For Social Security, you will want to obtain each spouse’s Social Security statement to define the benefit amount at different ages.
For potential pension income you will want to obtain a pension benefit statement from human resources that outlines the different ways that you can take your pension and whether it can be taken in a lump sum amount. The benefit statement should clearly outline the financial amount available in each circumstance.
If you own any annuities with guaranteed lifetime income you can contact the company or agent to determine the annual amounts available to you at different ages.
The second source to define are your investment assets. These can easily be summarized by obtaining account statements for all accounts dedicated to retirement such as 401(k)s, IRAs etc. Note that accounts don’t have to be retirement accounts in order to potentially utilize them in retirement.
The final source is real estate wealth or equity. You can use a combination of a mortgage statement (if you still have a mortgage on the property) and a resource such as www.Zillow.com to get basic estimates of the current equity available from real estate you own (including your primary residence). In future articles we will discuss ways to maximize or utilize equity to improve retirement outcomes. At this point we want to make sure that we don’t ignore it as a resource.
You could also include financial resources that may come into the picture later such as the sale of a piece of property or an inheritance.
Once you’ve completed this step you will know all the sources of predictable or guaranteed income, all investment accounts, and all real estate equity that can be deployed and maximize to accomplish the goals you defined in Step 1.
If you have any questions please feel free to contact me.