In the recently released Stanford Center on Longevity report entitled, “Disconnected: Reality vs. Perception in retirement planning” which we briefly discussed in our post of October 7, 2022, the authors noted,
“While retirement planning is highly personal and dependent on many different factors, there is an almost universal desire for ‘peace of mind’ in retirement.”
Given this near universal desire, we thought it might be helpful to outline the five relatively straight-forward steps we think you should follow to help you find financial peace of mind in your retirement with the assistance of the Actuarial Financial Planner (AFP).
5 Easy Steps to Follow to Find Financial Peace of Mind in Retirement
Step 1. Plan your spending in retirement. Be honest with yourself about your expected and unexpected recurring and non-recurring expenses, including future expected increases to these expenses. If you don’t have long-term care insurance, you may need to budget for a future stay in a nursing home and/or assisted care facility.
Step 2. Check the spending plan developed in Step 1 for feasibility by inputting the spending plan and your retirement assets into the AFP.
Step 3. Cover the present value of your planned essential expense spending with the present value of your non-risky investments. This step may involve delaying commencement of your Social Security benefits or purchase of a lifetime annuity.
Step 4. Maintain your Rainy-Day Fund at a comfortable level. This step involves managing your spending and investments so that the present value of your retirement assets exceeds the present value of your expected spending.
Step 5. Revisit the above steps at least annually to reflect changes in your spending plan or in your retirement assets.
Easy peasy. It’s not rocket science, and you don’t need to be a Nobel Laureate to make it work for you using the AFP.