I want to retire in 4 years on what I think will be $3,100 a month. Can I make this work – and should I get a pro to help me figure it out?

Photo of author

Getty Images/iStockphoto

Question: By my calculations, I’m retiring in four years on an income of $3,100 month. How can I stretch this amount as far as possible, and should I hire a professional planner to help me? (Also looking for a financial advisor? This tool can help match you with an advisor who can meet your needs.,

Answer: It’s good to see that you’re asking this important question several years before you plan to retire. Jim Hemphill, Certified Financial Planner at TGS Financial, says that $3,100 month could stretch to a single person living in an affordable area who watches every penny. “We have a client whose situation is not entirely dissimilar,” he says, noting that he moved from a pricier place in Philadelphia “to a much cheaper apartment in nearby State University City and he has an old Paid-up car.

That said, your situation may be different. “First, you’ll want to look at the sources of your retirement income. Will your income increase as the cost of living increases once you retire or will it remain at $3,100? Will you owe income tax on any income? Will you pay or will the income be tax-free?” says Mark Humphries, Certified Financial Planner at Sentinel Financial Planning. In fact, if that income rises, it will be easier to outgrow it if prices rise; Likewise, if $3,100 is yours then it is free and clear of taxes, which makes living easier than if it is not.

Having problem with your financial advisor or looking for a new one? Email [email protected]

The second thing Humphreys tells you is where you live and what lifestyle you’re used to. “If you live in low-cost area you can pay better rent than in a high-cost area. If you live a modest lifestyle, you can potentially make a substantial income,” he says. . You also have to take into account unexpected costs like healthcare, he added.

If you’re feeling like you won’t make it with $3,100 month, the biggest lever Hemphill says is that you’re probably working long hours, or working part-time in retirement. “If it’s an option you consider, be honest with yourself about the type of work you and how long you can afford to work,” Humphreys says.

If you can’t work in retirement, “use any savings or part-time work to try to delay claiming Social Security until age 70,” says Hemphill — which he says ” Can make a huge difference.”

Another great way to stretch your money, according to certified financial planner Steve Weiss at Buckingham Strategic Wealth, is to live less than your means and make sure you’re saving for any rainy day expenses. “Certain costs such as a new roof and of course medical care can be quite significant. Since you don’t plan to retire for 4 years, you can test your plan now and see how much you can make per month. How much good can one from $3,100,” says Weiss.

Also looking for a financial advisor? This tool can help match you with an advisor who can meet your needs.

There are other possible solutions to consider, such as a home equity conversion mortgage (HECM), which is a type of reverse mortgage that allows seniors to convert the equity in their homes into cash that is approved by the Federal Housing Administration (FHA). is insured. “While it is important to fully understand the program to determine whether it is right for you, an HECM may allow you to tap the equity in your home to supplement income,” says Weiss.

Basically, says Lauren Lindsey, certified financial planner at Beacon Financial Planning, you have two options: “Make more or spend less. If you’ve reviewed all of the options for deductions, find the income you need to make ends meet.” It may be necessary to work for

you need a financial planner for help?

It may make sense to hire a professional planner to review the situation and determine whether there are any obvious issues to address or opportunities to take advantage of. “There are planners that will a one-time plan, which can be a good start to at least know if you’re on the right track,” says Weiss. (Looking for a financial advisor? This tool can help match you with an advisor who can meet your needs.,

As far as working with a planner is concerned, which may represent a substantial cost to you, certified financial planner Philip Mock at 1522 Financial says that it can be beneficial to find a planner who works per Works on an hourly or project basis so you can get help in the fields. without paying for the help you need in areas you don’t need. “A planner will be able to a cash flow projection of your income, expenses, taxes, and inflation to give you an idea of ​​what income level is sufficient to meet your needs and goals,” says Mock. Adds Lindsey: “Having someone who specialized in cash flow can be very helpful in working on this but not all financial planners do.”

Having a problem with your financial advisor or looking for a new one? Email [email protected]

The advice, recommendations or rankings in this article are those of Marketwatch Picks, and have not been reviewed or endorsed by our commercial partners.

See also  Al Gore's firm shakes up CHIPS holding amid Taiwan concerns