4. Cut your lifestyle.  In retirement you may be forced to live on less.  Try cutting your lifestyle to that level before you retire.  Get used to it. 
5. Be realistic as to what it’s going to cost to live in retirement.  Frankly, there is no “one size fits all” formula for this.  The pundits are famous for telling us that in retirement we should expect to live off of about70-80 percent of what we spent prior to retirement. And, that may be accurate for some of us.  After all, in retirement, there may be less eating out and less clothing and dry cleaning costs.  And, presumably we won’t need to continue setting away that 10-15 percent in our retirement accounts.  But, what if you have higher medical costs?  Or, what if you’re healthy and you want to travel and do some mission work or visit the grandkids more often?  Such scenarios could easily require every bit of your pre-retirement income. 

6. Lastly, don’t be overly optimistic about investment returns.  I cringe when some radio money guru tells people they can withdraw (I call this the “burn rate”) 8-10 percent per year—and never run out of money!  Maybe—but, probably not.  The studies I’m familiar with are much more conservative.  Many experts believe that a more realistic figure would be to expect a burn rate of 4-5 percent a year. (This is based on several assumptions: First that you want 80 to 90 percent chance that the money to last for about 30 years.  Second, the money should be well diversified: about 50 percent in stocks and 50% in bonds/fixed assets.)  So, based on this formula, if you want $40,000-$50,000 per year in retirement, you should have roughly one million dollars in investments when you begin the process.

Steve Diggs presents the No Debt No Sweat! Christian Money Management Seminar at churches and other venues nationwide. Visit Steve on the Web at www.stevediggs.com or call 615-834-3063. The author of several books, today Steve serves as a minister for the Antioch Church of Christ in Nashville. For 25 years he was President of the Franklin Group, Inc. Steve and Bonnie have four children whom they have home schooled. The family lives in Brentwood, Tennessee.

A complete financial compendium, 19 chapters
• What you can do today to get out of debt and kill the Debt Monster
• A,B,C's of handling your money God's way
• How to save, invest, and retire wisely
• How mutual funds work
• How to stop fighting over money
• What to teach your kids about money
• Learn how home & car buying, college financing and insurance work.
• How to develop a budget that works -- forever!
• Features simple charts, graphs, and easy-to-use forms.

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