Financial Readiness


Financial readinessThere was one overarching reason that gave us a high confidence level that we could afford to retire. That reason was that our detailed financial plan indicated that we were good. We had researched several tools and liked the retirement planning tool from Fidelity for several reasons.

  • It covered our entire projected life expectancy
  • It allowed us to enter our forecasted budget amounts (investments, income and expenses) at a level of detail that we were used to
  • It automatically adjusted for inflation
  • And, maybe most importantly, the results it generated were the most conservative case
  • It permitted us to back test which is a process of adjusting downwards our investments and income to see what the bare minimum was that we needed in order to be able to get by.
  • Also, we were able to take out our social security to see how much of an effect that would have.

Lessons Learned

  • A retirement planning tool is a must
  • Use the tool to test out different retirement scenarios
  • Use conservative (i.e. not best or most optimistic) estimates
  • Add in a contingency amount to protect against risk