When it comes to figuring out if you will outlive your money in retirement, most people make only a best guess. But why guess? You can use a good calculator to help figure out if your retirement income will support your expenses and if you need to dip into your investments. You should also be able to figure out your retirement savings needs. Everybody should have a good idea if their withdrawals in retirement will cause them to outlive their money. We should also all understand how inflation impacts our expenses.
Will Income Cover Expenses?
Having enough income in retirement to cover expenses is a great place to be. Most people underestimate how stressful it can be when their retirement income doesn't cover their expenses. It's like an hourglass that is slowly draining away, except instead of sand the dwindling resource is their investments.
The great thing about having enough income in retirement is that the inevitable movements in asset prices become way less important to you. You will be able to better tolerate (psychologically and money-wise) market volatility. This also means you do not have to worry about dipping into investment principal, which leaves lots of room for unexpected expenses later on. We have written before about how to use dividend-growth stocks to help you retire early. The basic idea is to have enough dividend income in retirement to support all of your expenses.
Nobody wants to outlive their money and this is one of the most stressful questions to ask. Yet many do not know the answer.
Using A Calculator To Estimate Your Retirement Situation
You can use our free retirement withdrawal calculator, which is seen below. Note that this calculator is merely a quick estimate. If you want very accurate results as to how your retirement withdrawals turn out, you should use a free trial of the WealthTrace Retirement Planner, which accurately calculates tax rates every year and shows you your withdrawals over time.
Will your income cover your expenses and taxes in retirement? The WealthTrace Financial & Retirement Planner can help you find out. Start a 14-day free trial now.