What are retirement income plans?
Retirement income plans are quite helpful in forecasting what your monthly income will be after you retire. It helps you identify the possible sources as well as the amount of income you are likely to receive on a monthly basis.
How to make one
Making retirement income plans do not require a lot of skill or time. You can make it on a sheet of paper or a simple Excel sheet. As long as it includes your fixed sources of income and helps you chart your monthly expenses, it is certain to help you plan for your retirement.
When making retirement income plans, it may be helpful to follow a template. One column must have all the months of the year. A simple template could include the following.
- Age
- Year
- Month
- Income (fixed sources). This could include your and your spouse’s social security and pensions
- Living expenses
- Debts, such as mortgage
- Taxes
By using this template, you can be aware of how much you are likely to receive as income as well as how much you are likely to spend. You can even add the columns on a yearly basis to get a broader picture of the amount of income and expenses you are likely to have annually.
How to use retirement income plans
This is rather simple. All you have to do is add your income and then add all your expenses. Expenses will include living expenses, debts, and taxes. Then, simply subtract this sum from your income. This will help you gain an understanding of how much you are likely to save or whether you need to cut back on certain things. You can even add a ‘Gap’ column to keep track of these numbers.
Retirement income plans are thus a handy way of planning for the future. They offer specific as well as broader understanding of your financial future after retirement.