Financial Planning in Columbia, MO using spending estimates

As a company that focuses on fee-only financial planning for Columbia, MO residents, we routinely come across myths and misconceptions about the financial planning necessary to reach retirement goals.
One of our articles in the Columbia Tribune highlights a potential error people make when trying to figure out how much income they will need during their retirement years. One common way to approach determining how to fund a retirement plan is based on estimating the percentage of income people can afford to lose and still maintain their standard of living. Planners use ratios to say things like, “You make $100,000 a year now, but if we assume you need only about 70% of that during retirement, then we need to shoot for $70,000 per year during retirement from your financial assets at that time.”
This can be a big mistake as it does not take into account your personal spending needs. By not taking into account what your spending needs will be, you will probably be either struggling now, because you are saving an excess amount, or struggling later because you didn’t save enough.
To see examples of how to use your spending needs as the basis for financial planning, check out the article.
If  you would like to learn more about this and other personal financial planning topics and services, please contact us at 573-447-7007. Clarity Financial, LLC is a fee-only financial advisory firm in Columbia, MO. Appointments are welcome and initial consultations are free.
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This article is the property of Clarity Financial LLC.