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What does Check Off the Basics mean?

Check Off the Basics is a simple retirement planning approach that focuses on covering the various essential expenses people often need to cover in retirement, including things like a mortgage, utilities, groceries and transportation. And you decide what’s essential. You might not have a mortgage in retirement, for example, but you might have rent, condominium fees or home maintenance costs. Your basic expenses could also include:

  • Monthly medical expenses
  • Car loans, leases and maintenance
  • Travel expenses such as gas
  • Insurance premiums
  • Credit card payments
  • Any other ongoing expenses you deem essential

For some people, these expenses could also include things like a club membership, weekly round of golf or a monthly visit to family or friends, so it’s really up to you and what you consider essential.

What are the benefits of the Check Off the Basics approach?

Check Off the Basics differs from the traditional approach to retirement planning, which focused on simply saving a lump sum of money for retirement. With Check Off the Basics, you first determine your essential monthly expenses in retirement, then create a plan to ensure those basic expenses are covered. With these costs taken care of, you can focus on pursuing your passions. This approach is a great starting point for retirement income planning and helps break down the overall process into easier-to-understand steps. You’ll feel more secure and less stressed knowing you’ll be able to cover your essential expenses.

How can an annuity help in the Check Off the Basics approach?

An annuity provides protected income throughout your lifetime, typically through monthly payments you can count on. With those basic expenses covered, income from your other retirement savings and investments can be used for all of the other things you want to do in retirement. Remember, annuities, pensions and Social Security are the only sources of protected lifetime income.

Approximately how much will I need to save for retirement to cover my essential expenses?

It’s impossible to know how much to save for retirement unless you figure out how much you’ll need in retirement. Use the Check Off the Basics approach by focusing first on ongoing essential expenses you expect to have in retirement. That’s how much you need. Now work with a financial professional to develop a plan to cover those expenses with sources of protected income, such as Social Security, a pension or an annuity.

How can I determine how much retirement income I’ll need for essential expenses?

You can start by writing down how much you spend currently for these expenses. Then consider whether these costs will go up or down in the future. Your financial professional can provide help with these estimates. The Check Off the Basics approach is the first step in creating a retirement income plan. You can also calculate your essential expenses and sources of protected lifetime income in more detail by using the Retirement Income Security Evaluation (RISE) Score®.

When using the Check Off the Basics approach, what other factors should I consider?

Your financial professional is a great resource in helping you understand many of the unknown factors in determining your future retirement expenses. These could include health care costs as well as the effects of inflation. If you plan to live in another part of the country, remember that there can be regional differences in the costs of housing, utilities and other basic expenses. Cost-of-living calculators that allow you to compare living costs between cities are available online. Use several to get a rough estimate of the difference.

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