People now need to adjust their estimated post-retirement needs for inflation. Although people can’t know what future inflation will be, they can look at what it has been in the past and use their judgment to pick a rate for planning purposes. The amount of personal savings they will need to fund their retirement depends [...]
The starting point is to estimate the income level people will need in retirement to live the lifestyle people have become accustomed to, taking into account changes retirement will bring. Start by working up a detailed budget for their current living expenses, then adjust each item based on how People think their retirement lifestyle will [...]
Consumer debt (for example, credit card, credit union, and in-house financing) is a very expensive way to spend their money. Interest is no longer deductible on their income tax and the interest rate is substantial. If People want to make 15 percent to 20 percent on their money, simply pay off consumer debt. And, clear [...]
If we look over the cash flow analysis and summarize the spending in three categories, first, calculate the amount of their monthly fixed expenses. This includes rent or mortgage payments, utilities, car payments, gas and oil, and operating expenses. Second, calculate their necessary variable expenses. This includes taxes, insurance, car and home repairs, and doctor [...]
If a review of the net worth suggests something needs to be done to improve the financial situation, the best way to understand the problem is to compare what people earn to what people spend. This is called a cash flow analysis. It gets to the basic question of how much of their income is [...]
This includes their home, furnishings, automobiles, recreational vehicles, furs, jewelry, collections, tools, and equipment. To compute their net worth, gather all their financial records such as checkbooks, statements from banks, mutual funds, credit unions, and brokerage houses, and their loan balances. Check the value of their residence, automobiles, tools, and equipment by reading the classified [...]
These are fixed deposit, stocks, bonds, mutual funds, partnership, mortgages, real estate, annuities, and retirement plans.
The first step in the analysis is to determine the net worth. This is a summary of their spending and saving habits. It shows the cumulative effect of their financial decisions. It not only shows how they are doing, but also gives clues to potential changes to improve their financial future. In simple terms, their [...]
The place to begin an analysis of what people need to do for a financially secure retirement is to look at their finances today. This will give them insight into how they are spending their money, whether they are getting ahead, and how much they have been able to save.