05: Can you afford retirement?

Let us view retirement as a very long journey during which you resolve to enjoy the highest standard of living possible. Start asking yourself questions like: Are you going to stay in a five-star hotel or a two-star one? What kind of foods would you like to devour? How much would it cost to take tours whenever you like? And most importantly, what exactly are the children asking for?

If you're on the doorstep of retirement, happily smiling while thinking you're done with tiresome budgeting and financial planning, we've got bad news for you: You're not! If you want to retire in style, there is absolutely no way you can stop budgeting in retirement. You have to know how much money you need on a daily basis and how much you require for all of your retirement goals. You will have to make a budget and most importantly: stick to it. A monthly budget is ideal given that expenses are variable and you don't want to lose your way along the journey. Any retirement budget, however, could do with the life expectancy factored in. Use a life expectancy calculator to get a fairly close prediction based on how you answer the questions. Knowing when you might pop off would make your budgeting task easier. You are also advised to look into the matters of how to handle your taxes and insurance in your Golden Years. In addition, your budgeting plan will have to allow for any and all unexpected events. What if your spouse is taken ill or passes away? What if your pension fund invests in stocks and the stock market crashes? What if there is an accident in the family or a hurricane in the state? What if you must bail out one of your children at some point (we say let them rot in jail!)?

An analysis of your cash requirements is imperative before you ultimately retire. This hypothetical cash flow estimate can make the difference between a cheerful existence and continual heartache in your Golden Years. The calculations are based on your gross income and everything depends on your lifestyle. An intelligent financial planner can tell you whether you have come up with a figure that is realistic. Still, your standard of living will be your doing and he can't tell how predictably or unpredictably you would act in later years. In the end you would either be leaving an inheritance or a bounced check. While we do not suggest that you turn into a miser in your Golden Years, forethought is essential.

Many retirees downsize their housing in retirement years in order to take advantage of high real estate values. Some move to Panama, while others pack up for retirement homes. Retirees also like to move into small townhouses or to the suburbs - where they can live their lives away from the hustle and bustle they've constantly breathed in. It is also possible to buy two or three houses in smaller centers for the price of one city house. Again, it is your life and up to you to decide how you will spend the remainder of it. You might just want to remain in your present neighborhood because of friends, family, or health facilities - or you may want to fly off to a Caribbean island for a much awaited change.

Quite a few retirees like to invest in income producing portfolios. If you are going to have an investment portfolio in your retirement years, you will be faced with the option of either using the funds generated as retirement income or leaving the capital intact for your beneficiaries. Parents could decide that the children would inherit the home and all of their personal effects but the investment income could be utilized as a pension plan along with the capital in order to supplement income and protect against inflation.

Once the figures are set before you - the amount of money you are expected to have and the amount you expect to use following retirement - a mathematical calculation will quickly reveal how soon you can retire. Unless you are a workaholic or see the workplace as an escape because your household is dysfunctional, you might want to opt for an early retirement plan so as to benefit from your Golden Years as long as you can!