Saving for retirement to sustain your standard of living is a continual effort to prevent your quality of life from declining in later years. Unfortunately, for many retirees, this goal can be difficult to achieve. Even with planning, 52% of working-age households may not be able to sustain their lifestyles in retirement.[i] You can take steps today so that you can pursue life on your terms, no matter what retirement lifestyle you choose.
Find Ways to Improve Your Cash Flow
The balance between your spending and income can make a significant difference in your ability to maintain your standard of living in retirement.[ii] When you have more money going out than coming in, you may end up lacking the resources later in life to afford the lifestyle you desire. Here are ways to address your retirement cash flow:[iii]
- Identify all liabilities: First, take an inventory of your debt. These liabilities may include home mortgages, car payments, and school loans.
- Calculate all expenses: Next, examine your other expenses. These daily and monthly items may include costs for groceries, paying utility bills, and putting fuel in your vehicles.
- List income sources: Now, identify all your household incomes. Sources can vary and may include rental properties, Social Security income, and dividend payments.
- Determine the difference: Calculate the difference between your ongoing expenses and your projected income. If you have a deficit, then you will need to find ways to make up the gap or cut costs.
Be Realistic
Unfortunately, not everyone understands what it takes to maintain a prosperous lifestyle. While only 33% of households realistically understand their retirement risks, 19% of households are not giving adequate attention to their finances, and both groups may not take the steps they need to improve their situations.[iv] You can improve your standing when you honestly evaluate your finances.
No one wants to experience unexpected declines in the quality of their lives during their retirement years. Your goals and financial standing will help shape your retirement lifestyle.