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A question I am frequently asked is “How much money do I need to retire?” Most calculators you can find on the internet provide an oversimplified answer and do not take into account each individual’s unique situation. For some people $2 million is more than they could ever spend and for others, it is not nearly enough.

Over the past twenty years, I have had the opportunity to observe many people’s spending habits after they quit working. Those who are the most flexible with their expenditures have the best chance of achieving a financially successful retirement. Your retirement income goal should include your needs, wants and wishes. We prepare a spending plan at the outset of retirement and continually monitor it based on changing market conditions and changes in our clients’ lives.

Retirees who had the flexibility to scale back their spending when we experienced the unprecedented market downturn in 2007 and 2008 were able to ride out the recession with a lot less angst. Deciding to postpone a planned vacation or car purchase was easier than deciding which bill to pay.

An area of spending I see many clients struggle with is the support of their adult children. Long after they have graduated college, kids are now relying more on their parents to supplement their income. The recession has only exacerbated the situation. If you plan to provide financial assistance to your kids, make sure that you account for this in your retirement budget and that it will not derail your plans.

An article by Carrie Schwab Pomerantz, Chief Strategist, Consumer Education, Charles Schwab & Co, “How to Help Young Adults Financially” provides some great examples of how parents can support their children and encourage them to become financially independent. By creating a plan for not only your needs, but the potential needs of your family, you will all have a better chance that your money will outlast your life.

Chris Carleton, CFP®