Will I Have Enough Money After I Retire? Script: (009)

Will I have enough money after I retire? This is probably the most common question I receive as a financial advisor. The key word is "after." Because once you have retired, your focus changes from how much you can accumulate to how long your money will last.

The math is simple. How much income will you be able to draw from during retirement minus your estimated expenses? But oversimplifying the equation can uncover a few surprises along the way.

Here's a simple exercise.

First, write down all the expenses that will continue during your retirement. Take three months of bank statements and credit card statements and highlight all expenses that will not go away anytime soon. Be careful not to estimate. Our minds can distort reality.

Next, write down everything you plan to do during retirement and put a price tag on each item, like one-time purchases or travel. 

Total those numbers.

And last but not least, estimate how long you plan to live. I realize that no one has a crystal ball but estimate high. Average life expectancy has increased over the past few decades.

What percentage of your retirement will you need to meet those expenses annually? How many years until your retirement bucket is depleted?

Does the math add up?

If so, you can walk into retirement with confidence.

If not, the earlier you plan, the more options you have to make the necessary adjustments.