28Financial ThoughtsGary Gonzalez, Ret.as a retiree than you do while actively working. I have seenestimates ranging from 75% to 90%. From my experience,it is better to plan to replace 100% of your current income(adjusted for inflation) when you retire. If you are anything likeme, your travel budget will easily make up for any reductionsin expenses resulting from leaving the workforce.The True CostHow much on average does it cost you each month tomaintain your current standard of living? It is a simple question,yet without the answer, it can be exceedingly difficult to createa meaningful financial plan. How would you know that forwhich to plan?Fortunately, there is an uncomplicated way to find theanswer, which I will explain in the next couple of paragraphs.The first step is to take the current year’s worth of statementsfor all accounts from which you make withdrawals, includingdirect deposits from your paycheck that go toward payingbills (such as health and life insurance). Anything on yourstatements that shows as a debit counts toward maintainingyour lifestyle for the year.Next, add them all up, then divide the total by twelve, andyou have your answer. If you believe that you had unusualexpenses for the year that should not count, then do theexercise for 2 years and divide by twenty-four. Just realize thatunexpected expenses are part of maintaining your lifestyle,and therefore should be part of your financial plan.Once you have an accurate picture of what it costs to liveyour life, you can now begin to plan out how to end up withenough financial resources in retirement to continue enjoyingthe same standard of living. There are many planningresources for retirement, which assume you will spend lessIt is often the case that we spend more than we thought wedid. My hope is that your curiosity will get the best of you, andyou will want to know exactly where all those dollars are going.Taking the exercise to this next step can provide interestinginsights into how you spend your money, and whether you arespending it in ways that leave you feeling fulfilled.Of course, typically a substantial portion of your spendinggoes toward living expenses, but where does the so-calleddiscretionary spending go? Each of you will spend the surplusin ways that are unique to each of you, but you may besurprised to find that you are spending many dollars in waysthat seem wasteful when measured against what you trulyvalue.Taking a detailed look at how you spend your money canbe an eye-opening and liberating experience as you discoverways to redirect expenditures from things and experiencesthat leave you feeling empty to ones in which you find valueand meaning. You may also discover a new-found abilityto put more of your hard-earned dollars toward that dreamretirement you have planned for yourself. At the very least,you will have a much clearer picture of where all your moneygoes.As always, if you have any questions or concerns, feel freeto reach me on my cell, 954-804-5539.Until next time, be safe out there.GaryOctober 2022 | JUMPLINE Magazine
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