Jumpline magazine OCT 2022-pages - Flipbook - Page 28
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Financial Thoughts
Gary Gonzalez, Ret.
as a retiree than you do while actively working. I have seen
estimates 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 like
me, your travel budget will easily make up for any reductions
in expenses resulting from leaving the workforce.
The True Cost
How much on average does it cost you each month to
maintain your current standard of living? It is a simple question,
yet without the answer, it can be exceedingly difficult to create
a meaningful financial plan. How would you know that for
which to plan?
Fortunately, there is an uncomplicated way to find the
answer, which I will explain in the next couple of paragraphs.
The first step is to take the current year’s worth of statements
for all accounts from which you make withdrawals, including
direct deposits from your paycheck that go toward paying
bills (such as health and life insurance). Anything on your
statements that shows as a debit counts toward maintaining
your lifestyle for the year.
Next, add them all up, then divide the total by twelve, and
you have your answer. If you believe that you had unusual
expenses for the year that should not count, then do the
exercise for 2 years and divide by twenty-four. Just realize that
unexpected 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 live
your life, you can now begin to plan out how to end up with
enough financial resources in retirement to continue enjoying
the same standard of living. There are many planning
resources for retirement, which assume you will spend less
It is often the case that we spend more than we thought we
did. My hope is that your curiosity will get the best of you, and
you will want to know exactly where all those dollars are going.
Taking the exercise to this next step can provide interesting
insights into how you spend your money, and whether you are
spending it in ways that leave you feeling fulfilled.
Of course, typically a substantial portion of your spending
goes toward living expenses, but where does the so-called
discretionary spending go? Each of you will spend the surplus
in ways that are unique to each of you, but you may be
surprised to find that you are spending many dollars in ways
that seem wasteful when measured against what you truly
value.
Taking a detailed look at how you spend your money can
be an eye-opening and liberating experience as you discover
ways to redirect expenditures from things and experiences
that leave you feeling empty to ones in which you find value
and meaning. You may also discover a new-found ability
to put more of your hard-earned dollars toward that dream
retirement you have planned for yourself. At the very least,
you will have a much clearer picture of where all your money
goes.
As always, if you have any questions or concerns, feel free
to reach me on my cell, 954-804-5539.
Until next time, be safe out there.
Gary
October 2022 | JUMPLINE Magazine
