How Real People Achieve a Secure Retirement and How You Can Too
Most people think that retirement planning is complicated and time consuming and maybe even futile. Too many people believe that a secure retirement is beyond reach. However, we have proof that improving your retirement plan is achievable and that it can even be easy and relatively speedy.
Recent analysis revealed that a large percentage of people who use the NewRetirement retirement calculator significantly improved their retirement plans. In fact, 35% of first time users actually achieved a plan for a secure retirement by discovering and making changes to their plans using this tool.
How Do You Achieve a Secure Retirement?
Achieving a secure retirement means that you have secured enough resources to last you for as long as you live, no matter how long that turns out to be. Typically, retirement resources include Social Security, retirement work, annuities, withdrawals from savings, dividends, and more.
In retirement, you have to live with this relatively fixed set of resources for your remaining lifetime. Ideally, you are able to set a budget that will work from now into the distant future. Without adequate income, you are running up debt or making sacrifices that you had not planned on.
A secure retirement means that you have adequate lifetime income to cover your lifetime expenses.
The good news is that you actually have a lot of different levers for figuring out how to achieve this goal.
How to Achieve Adequate Lifetime Income
Of the thousands of people who have used the NewRetirement Calculator, more than half learn that they have not achieved adequate lifetime income. However, 35% of these users discovered fixes for the problem in the first 30 minutes they used this planning tool. Some of these users are already retired and others have years until the big day, but everyone is finding solutions that improve their plans.
By making big and little changes to their retirement projections, these people were able to realize a secure future for themselves.
So, how did they do it?
- 97% of users made adjustments to their retirement spending. They either spent less every month or they adjusted both current and future spending at different rates. (Studies suggest that this is a good strategy. Retirees typically spend more when they first retire, then slowly spend less until expenses spike near the end of life.)
- 96% chose to save for a longer period of time or save more each month.
- 41% improved their plans for what to do if they have a long-term care expense.
- 38% explored ways to optimize Social Security.
- At least 36% chose to work longer than they had originally entered, either in a part-time or full-time job.
- 27% thought that they will realize a better return on investments than the system default of 5.5% optimistically.
- 25% opted to tap into their home equity through downsizing, a reverse mortgage or another option.
- 20% added a lump-sum contribution to their retirement savings. This might be from an inheritance, tax return, or other event.
- 7% planned an annuity purchase to guarantee income.
How Does the NewRetirement Calculator Work?
1. Set Up
After creating an account, you enter some baseline data about your finances. This information is combined with some assumptions and is used to create an analysis of how well you have planned for retirement. You can find out:
- When will you run out of money? Do you have adequate income?
- How much money should you have saved. How much will you have in the future.
- How your retirement plan compares to averages in your zip code.
- What is your net worth and will you have an estate?
- Risks, cash flow, and more.
After reviewing where you stand, you can now add information, providing more details like different spending levels for different phases of retirement. You can also set your own projections for inflation, medical cost inflation (this is typically higher than inflation), investment returns, and more. The system enables you to set a range for these rates – a pessimistic and an optimistic number.
Adding these details and beginning to play with your information can be incredibly powerful because the system enables you to immediately see how any single change impacts when you will run out of savings, whether your cash flow is improved, and the potential value of your estate.
3. Improve Your Plan
After updating the system with some additional details and seeing how it works, you will easily discover for yourself how you can achieve adequate lifetime income.
- You will first try to fund your retirement through your longevity using optimistic assumptions.
- The next goal is to fund your retirement through your longevity using pessimistic assumptions.
- Finally, you can set an estate planning goal and work to maximize your lifetime wealth.
It is important to maintain and update your plan at least once a quarter to make sure that you are sticking to your projections.
What People Have to Say About the NewRetirement Calculator
Forbes magazine called it a “new approach to retirement planning” and people who use it give the calculator great reviews. Here are a few recent quotes:
“Great calculations that we have not thought about. Thanks for easy charts and graphs.”
“It is the most comprehensive planner I found. It covered my situation better than any other.”
“Very detailed site. Verified my wife and I are on the right track with our saving plan for retirement. Aruba here we come!”
“I just started exploring the site, and I already discovered a strategy I hadn’t considered for ensuring my retirement income.”
“The tools are very helpful when planning a retirement strategy for when to claim SS Benefits, when to stop working, etc.”
“I’ve looked at many sites and this was the first site I used which gave a complete ‘answers-in…. answers-out’ summary which made honest sense.”