Financial Expert Marion G. Cuff, CFS: Retirement Expenses Expectations
Marion G. Cuff, CFS
What should I do if I determine that my income during retirement won't be enough to meet my retirement expenses?
Fortunately, you may have no need to despair. The further you are from retirement, the more time you have to resolve the
expected shortfall. Even if you are closing in on retirement, there may be steps you can take to bridge the gap.
In some cases, the best solution is to cut back current expenses and use that money toward retirement. This will enable you to put
more money into your IRA, 401(k), and other retirement savings vehicles. Although you may not think you spend much on dining
out and entertainment, such expenses really add up over time. Eliminating large purchases like boats and other luxury items will
also make a big difference. Another way to save a bundle is to look into public colleges where your child can get a quality
education for a fraction of what a private college costs.
But you might be unwilling to make such sacrifices. If so, or if you simply can't afford to save any more than you already are,
consider investing more aggressively. Weight your portfolio more heavily toward stocks and growth mutual funds, and less toward
fixed-income securities. A more aggressive investment portfolio exposes you to heightened volatility, but it may also provide a
much greater return over the long run. The result: a potentially larger nest egg for you to draw on during retirement. Before
investing in a mutual fund, carefully consider its investment objectives, risks, fees, and expenses, which are contained in the
prospectus available from the fund. Review the prospectus carefully, including the discussion of fund classes and fees and how
they apply to you.
Another alternative is to lower your planned expenses during retirement by setting more modest goals. Instead of buying that
beach mansion on the Riviera, settle for a smaller house a few miles from the ocean. Similarly, instead of taking expensive trips
around the world on a regular basis, travel closer to home and less often. The idea of a more frugal retirement lifestyle may not
appeal to you, but financial reality may require it.
You can take a variety of other steps to make sure that retirement income will at least keep pace with retirement expenses. Some
of the most common: work part-time during retirement or simply put off retiring until you're in a better financial position. Consult
your financial planner for further advice.
Working with an advisor that holds the CFS designation does not guarantee investment success.
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