Map your clear path to retirement

Do you have a retirement dream once you stop working?  After spending a career thinking about how you want the next step to unfold, it’s going to take the proper funding to bring your dream to fruition. How will you determine a budget for retirement?

There’s no a one-size-fits-all answer, but a common concern among Americans is outliving their money. Mapping out a plan well in advance is a good way to identify potential income gaps and close them while there’s still time, helping ensure your assets last throughout retirement.

Understanding your retirement vision

Many Gen X and millennial savers underestimate how long their retirement might last and how much income they’ll need to support the lifestyle they want. A clear plan can help you understand your projected expenses, how long your savings may last and whether additional income sources, like annuities or investment accounts, could help strengthen your long-term strategy.

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Common obstacles to retirement planning

The economy, global events and inflation can all contribute to market ups and downs. No one has control over these external pressures, which can make them difficult to plan for. However, by taking inventory of your savings and carefully projecting your expected income and expenses in retirement, you can make more informed decisions that can help you maintain the lifestyle you want in the future. 

In surveying U.S. adults about their retirement savings strategies and related topics, we found that 55 percent are worried about outliving their money. A separate joint poll from Kiplinger and Athene revealed several other important insights that may cause you to think about your finances in retirement from a different perspective.

• Inflation concerns. Seventy-seven percent of Americans polled said they are concerned that inflation could cause serious economic hardship in retirement. 
• Market volatility and recession risk. Respondents expressed concerns about a potential recession and bear market, saying they are among their top financial concerns.
• Social Security uncertainty. Many people aged 50 or more cited their uncertainty over the financial strength of Social Security as one of their top two concerns.
• Rising health care costs. With 80 percent of the respondents concerned about the rising cost of health care, it’s important to think about how you’ll manage these costs if your job doesn’t provide retiree health coverage and you’re too young for Medicare.  
• Longer life expectancy. As lifespans increase, it takes careful planning to make sure your retirement income strategy sets you up for success and your savings do not run out too soon. 

Mapping your retirement FAQs

While no two retirements look the same, the questions people ask as they prepare for this next phase are often similar. Here are answers to frequently asked questions to help you map out your retirement journey with greater confidence. 

Q1: How can I figure out if I’ll have enough money for retirement?

Start by estimating your future expenses and comparing them to projected income sources like personal savings, Social Security and retirement accounts. A retirement budget worksheet can help break down your wishes, wants and needs and highlight any existing income gaps. 

Q2: What are the biggest obstacles people face when planning for retirement?

Common retirement planning challenges include uncertainty about the future, underestimating retirement expenses, emotional decision-making and lack of a clear income plan. 

Q3: Why is it important to identify income gaps early?

The sooner you see a gap between retirement income and expenses, the more time you have to adjust, whether through saving more, reducing expenses or exploring guaranteed income solutions such as annuities.

Q4: What steps can help maintain my standard of living in retirement?

To help maintain your standard of living in retirement, it’s important to plan ahead, track spending, estimate future needs and create a diverse mix of income sources that can help support your desired lifestyle and ensure your income and expenses are aligned. 

Q5: What tools can help me map my retirement plan?

To gain greater clarity on your future needs and priorities, use budget worksheets, retirement planning quizzes and guidance from a financial professional who can help you identify your goals and map your path to retirement. 

How to identify and close income gaps

Hal Hershfield, professor of marketing and behavioral decision making at UCLA’s Anderson School of Management, found that people have trouble imagining their future selves, and that can keep some people from planning ahead for a major event like retirement. Without that mental picture, the future may seem too abstract. The disconnect between their present and future selves can lead to hesitation and uncertainty around financial decisions.

Creating a retirement budget years before you need it can be reassuring. Not only will you see how much you’ve saved and get an idea of future expenses, but you can understand where your future income will be coming from. If there are gaps between expenses and income, looking at the big picture can help reveal them. And keep in mind, it’s best to identify gaps while there’s still time to find solutions for helping get back on track. 

Maintaining your standard of living in retirement 

For some retirees, spending in retirement turns out to be higher than anticipated, requiring lifestyle adjustments to help ensure their retirement assets last. In fact, 39% of working-age households surveyed are at risk of seeing their standard of living fall in retirement. Rising costs for everyday expenses, health care costs and increasing longevity can place additional strain on fixed incomes. Proactively reviewing spending habits, prioritizing essential expenses and adjusting expectations where necessary can help retirees better manage their resources and help preserve financial stability throughout retirement. 

Steps to start mapping your retirement strategy

If there are gaps between your income and expenses, consider shifting strategies if you need to. That could mean cutting current expenses by downsizing your home and putting that money toward savings or making extra mortgage payments to make sure your house is paid off before retiring. Maybe the solution is looking into financial products that can guarantee a steady stream of income in retirement. Regularly reviewing and updating our plan can also help ensure it stays aligned with your goals and circumstances as they change over time.

Tools to help you build your plan

Before creating a plan to boost financial readiness, it can be helpful to understand some of the needs you may have in retirement. With a better idea in mind and your priorities penciled out, it’s easier to project how much income you’ll need to live the life you want. Here are tools to help you get started. 

• Retirement budget worksheet: Use this worksheet to take inventory of your income, your savings and the expenses you expect to have after you stop working. 
• Retirement needs quiz: Use this quiz to help identify your retirement savings needs and what is most important to you when preparing for the next chapter. 
• Guaranteed income options: Including sources of guaranteed income in a retirement plan can help provide funds you can count on to retire your way and protect you from outliving your savings. 

Build your personalized path to retirement

Prioritizing what an ideal retirement looks like for you can help determine the diversified income strategy you’ll need to get there, but the first step is knowing where you are today. Taking time to assess your savings and estimate your retirement spending and income sources now can help you map your path to a remarkable retirement.

Want the most from your retirement? Get smarter with Smart Strategies from Athene. Your source for tips, tools and financial solutions that can help you live your best life.