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Q: I'm five years away from retirement, and wondering if I'll be able to maintain my current standard of living once I transition from full-time employment. How can I figure out what my standard of living will look like when I retire?

 

A: If you think you'll be spending the same in retirement as you did while working, you'll need retirement income that's equal to what you've been used to.

 

However, if you can find ways to reduce your cash outflow, you can maintain the standard of living you've been accustomed to even if your income level is lower.

 

Here are three tips to determine if you'll have enough income to maintain your pre-retirement standard of living:

 

  1. Estimate your retirement expenses.
  2. Take inventory of your retirement income. This includes Social Security, pensions, retirement accounts and annuities.
  3. Subtract your expenses from your income. Will your estimated retirement income be enough to cover your expenses? Or will you need to cut down on some expenses so you don't go over budget?

 

Keep in mind that you'll need enough savings and income to last your lifetime. Retirement can last 30 years or more, so work with a financial advisor to understand your options for conserving and growing savings, obtaining income from your assets, and earning money, if necessary, to fill any gaps.

 

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