Figure Out a Retirement Plan (if 50 or over)

You need a monthly income to stay in your house, pay your taxes, keep your car on the road, and remain active in your community.  Not just now but for the rest of your life and (if not single) for the life of your survivor.

The calculator below helps you develop a Retirement Income Plan by providing Quick Estimates using standard rules-of-thumb, that you can correct, of:

• The monthly income you need 
• Your current monthly income from Social Security, employer pensions, rents, etc., and the income you might get from your savings
• How you might add to your income and cut your expenses (and thus the income you need) if you downsize or adopt a less expensive lifestyle

For better estimates, and estimates of what you could get from a reverse mortgage or government benefits,  use the tools in the TOOLKIT below.

In ADVANCED you can 1) enter those estimates or other corrections to update your Plan and 2) also see if your survivor (if you’re not single) will have the income he or she needs.

A rough rule-of-thumb says you need 75% of what you earned while working.

If you earned $50,000 a year, the rule-of-thumb says you need about $37,500 a year, or $3,130 a month (all figures rounded to the nearest $10) rising in line with prices. 

For an estimate of how much you need, replace the $50,000 in the example  with your pre-retirement income and that of your spouse (or partner) if you’re not single.  

You can then correct that rule-of-thumb estimate, if you like, by entering “YOUR FIGURE” for your Monthly Retirement Income Target.

Please fill all required fields

header-small	Your Monthly Income Target
header-column	Pre-Retirement Income		You	Spouse	Total
input results-small	Yearly Income
input results-small	Monthly Income
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header-column	Retirement Income Target		Your Figure		Target
input results-small	Your Monthly Income Target
header-marker	Add Up What You Have
header-orange	Your Current Monthly Income
text	In the white spaces, below, enter the monthly income you get from Social Security, employer pensions, and other monthly sources, such as rents, and how much you have in savings.
text	We'll then use rule-of-thumb estimates to see what you could get from savings, downsizing, and adopting a less costly lifestyle.
text	For better estimates, and estimates of what you could get from a reverse mortgage or means-tested benefits, use the tools in the TOOLKIT below.  Then enter these estimates in ADVANCED, below, to update your plan.
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header-small	Monthly Income
header-column	Income You Get Each Month		You	Spouse	Total
input results-small	Social Security
input results-small	Employer Pensions
input results-small	Rents, etc.
input results-small	Income from Savings:
text	If you have $100,000 in savings invested in stocks and bonds, a rule-of-thumb says you can draw out $330 a month ($4,000 each year) with little risk you'll run out of money.  So enter how much you have to see what you might get.
input results-small	Your Savings
input results-small	Your Income from Savings
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input results-small	YOUR CURRENT MONTHLY EXPENSES
input results-small	YOUR CURRENT MONTHLY INCOME
input results-small
header-marker	If You Have a Shortfall
header-orange	What Downsizing and a Less Costly Lifestyle Could Do
header-small	What Downsizing Could Do
text	if you downsize from a $250,000 to a $150,000 house, a rule-of-thumb says you could increase your savings and income from savings about $250 a month & reduce your housing expenses about $270 a month.
text	Replace the figures in the example to see what you might get.
header-column	Current House		Mortgage	New House
input results-small
input results-small	Increase in Income from Savings
input results-small	Cut in Housing Expenses
gap
header-small	What a Less Costly Lifestyle Could Do
input results-small	If You Cut Spending		0%5%10%15%	that's
gap
header-small	If You Downsize & Adopt a Less Costly Lifestyle
text
input results-small	NEW MONTHLY EXPENSES
input results-small	NEW MONTHLY INCOME
input results-small
header-marker	If You Still Have a Shortfall
header-orange	Consider a Reverse Mortgage or Government Benefits
text-bullets	A reverse mortgage is a new and somewhat complicated option that could eliminate mortgage and/or increase your monthly income.
text-bullets	You might be entitled to government benefits if your income is low and you have limited savings.
text	The TOOLKIT, below, has information about these options.  You can then enter what they'll do in ADVANCED, to add these options to your Retirement Income Plan.
header-marker	Retirement Income Plan
header-orange	Monthly Expenses
input results-small	Your Original Monthly Income Target
input results-small	Less Cuts in Spending From
input results-small	Downsizing
input results-small	Adopting a Less Expensive Lifestyle
input results-small	Reverse Mortgage (eliminate current mortgage)
input results-small	Government Benefits
total	YOUR MONTHLY INCOME TARGET
header-orange	Your Monthly Income
input results-small	Monthly Income from Social Security, Pensions, Rents, etc.
input results-small	Plus Income From
input results-small	Savings
input results-small	Savings Added From Downsizing
input results-small	Reverse Mortgage
input results-small	Means-Tested Benefits
total	YOUR MONTHLY INCOME
total
header-marker	Advanced
header-orange	Enter Better Estimates
text	Use the tools in TOOLKIT & enter the better estimates you get to update Your Retirement Income Plan.
input results-small	Income from Savings
header-column	Change in Expenses & Income From			Expenses	Income
input results-small	Downsizing
input results-small	Less Costly Lifestyle
input results-small	Reverse Mortgage
input results-small	Government Benefits
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header-orange	Will Your Survivor Have Enough?
header-small	Survivors Generally Need Less, But Also Generally Have Less
text-bullets	One person needs less income than two.  We assume your survivor will need 70% of what you need as a couple.  As survivors need less, we also assume they get 70% of any government benefits you get as a couple.
text-bullets	Survivors get one Social Security benefit, not two.  But if you're married, the survivor can get the higher of your two Social Security benefits.
input results-small	So tell us your marital status			I'm MarriedI'm Partnered
text-bullets	If married, your survivor generally gets half the deceased spouse's employer pension.  That's what we assume.
text-bullets	Most employer pensions, however, are not increased in line with prices.   So we assume they will buy only 60% of what they do today when the first spouse (or partner) dies.  We assume the same for income from a reverse mortgage.
text-bullets	Caring for the final illness typically reduces the couple's savings.  We assume the final illness will reduce your savings, including savings from downsizing, 20%.
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header-small	Will Your Survivor Have Enough?
header-column	Who Survives:		You
input results-small	MONTHLY INCOME
input results-small	Social Security
input results-small	Employer Pensions
input results-small	Rents, etc.
input results-small	Savings
input results-small	Downsizing
input results-small	Reverse Mortgage
input results-small	Gov't Benefits
input results-small	MONTHLY INCOME
input results-small	MONTHLY EXPENSES
gap
input results-small
input results-small

You need reserves, either savings or home equity you could tap, should you need a new roof or furnace or an expensive medical procedure.

But you probably DON’T need to hold large reserves for expenses down the road.

Expect to spend more on health care, perhaps a good deal more.  But spending on most everything else typically declines and generally offsets much if not all of the rise in health care spending.

The big risk is long-term care.  But unless you have a lot of assets – more than enough to provide the income you need – it rarely makes sense to hold reserves to pay the cost.

• Most people rely on state Medicaid programs for those with “limited means.”  You don’t need large reserves if you’ll to exhaust your “means” should you need to enter a nursing home, usually at the end of life.  Many states also allow your spouse to keep the house + about $100,000. 
• You can also buy long-term care insurance.  It costs about $200 a month, per person and the premiums could rise in the future.  Such insurance, however, can significantly cut or eliminate your need to hold reserves for long-term care. 

To Downsize. Your house is often your largest asset and largest expense.  To see the income you could get and the expenses you could cut if you downsize, use Figure Out How Moving Changes Your Finances. 

To Adopt a More Sustainable Lifestyle. To see where your money goes and where you might cut back, use Figure Out How to Make a Budget in 3 Minutes.  To identify specific ways to save money, use Figure Out Where to Cut Spending.

To Take a Reverse Mortgage. You can get cash, a line of credit, or an income for life, and can stay in your home for the rest of your life.  But there are things you need to know. To learn more about reverse mortgages, please go to: economiccheckup.org/reverse-mortgage.  To see what you might get, use the Government Approved Calculator, from the National Reverse Mortgage Lenders Association.

To Get Means-Tested Benefits.  Many retirees are eligible for benefits to help pay for medicine, medical care, food, utilities, and other expenses, but don’t apply.  To see if you are eligible, use the National Council on Aging’s Benefits CheckUp.

Then Get It Done. Put reminders in your calendar. Schedule what’s urgent first. Then what’s big or done quickly. Then what’s not so big or takes time.  And in no time you’ll be DONE.

Income from Savings

• The 4% Rule:  In your mid-60s, you can draw out 4% of what you have in savings each year (1/3% each month), rising to keep pace with inflation, with “little” chance of running out of money.  As you can get a higher % when older, or if you use your savings to delay claiming Social Security, we see 4% as reasonably conservative.  

Income from Downsizing

• It costs 10% of the value of your current house to downsize: to 1) fix-up your house, 2) sell your house, 3) move your belongings, and 4) fix up & furnish the new house.  After paying these costs, thedifference between the price of your current and new house is added to your savings. 

Cut in Housing Expenses from Downsizing

• Housing expenses – taxes, insurance, utilities, and upkeep – are 3.25% of the value of the house.

Cut in Expenses by Adopting a Less Costly Lifestyle

• If you downsize, the reduction in your spending after you downsize.