How much will money will you need in retirement, adjusted for inflation? Today on Your Money, Your Wealth® podcast 431, Joe Anderson, CFP® and Big Al Clopine, CPA spitball on your future dollars, how to calculate the tax on Roth conversions, and the benefits of converting to Roth in down markets. Plus, should retirement savings contributions be half pre-tax and half post-tax? And finally, saving to a 529 plan for your kids, or sending them to Hollywood stunt training camp – which would you do!?

00:00 – Intro
00:49 – How Much Will I Need to Retire in Future (Inflated) Dollars? (Jared, Clifton Park, NY)
05:51 – Can We Retire Early With $400K Savings and $80K Pensions? That Depends on the Inflation Factor (Marcus, Queens, NYC – from episode 373)
14:36 – Big Al’s Quick Retirement Calculator – download:
15:22 – How to Calculate Tax on Roth Conversions & the Benefits of Converting in Down Markets (Robin)
20:00 – Should I Save Half Pre-Tax and Half-Post Tax for Retirement? (John Brown, NV)
27:50 – 10 Steps to Improve Investing Success – download:
28:26 – Hollywood Stunt Training Camp vs. Saving to 529 Plan (Mike, Utica, NY)
33:40 – The Derails

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retirement planning is a crucial step in securing your financial future. Being aware of your retirement needs and understanding how to calculate them in future dollars is essential for effective planning. In the latest episode of the “Your Money, Your Wealth®” podcast, episode 431, Joe Anderson, CFP® and Big Al Clopine, CPA delve into the details of this topic, sharing insights and tips to help you plan successfully.

When it comes to calculating your retirement needs, it is important to consider the impact of inflation. Inflation is the rise in the cost of goods and services over time, and it can significantly erode your purchasing power during retirement. The podcast hosts emphasize that you need to account for inflation while estimating your retirement expenses. By doing so, you can ensure that you have sufficient funds to support your desired lifestyle during your golden years.

To calculate your retirement needs in future dollars, you can follow these steps:

1. Determine your current annual expenses: Start by understanding your current spending habits and identify your annual expenses. Categorize your expenses into essential and discretionary ones. Ensure that you include all your regular bills, mortgage or rent payments, groceries, healthcare costs, transportation, and any other expenses you typically incur.

2. Adjust for inflation: Inflation typically averages around 2-3% annually. To calculate your future expenses, you need to account for this inflation rate. Multiply your current annual expenses by the anticipated inflation rate over the number of years until your retirement.

3. Account for changes in expenses: Consider any changes in your expenses during retirement. For example, you may have paid off your mortgage, resulting in a decrease in your housing costs. On the other hand, healthcare costs tend to rise with age. Assess your specific situation and make adjustments accordingly.

4. Estimate your retirement duration: Calculate how long your retirement is likely to last. While this can be uncertain, the hosts mention that a conservative estimate is around 30 years.

5. Consider Social Security and other income sources: Take into account any anticipated income from sources like Social Security or a pension. These income streams can reduce the amount you need to withdraw from your retirement savings.

6. Account for investment returns: Consider the potential investment returns on your retirement savings. This will help you determine the amount of savings needed to generate the desired income during retirement.

7. Consult with financial professionals: It is prudent to seek advice from a financial professional, such as a Certified Financial Planner (CFP®), to help you navigate the complexities of retirement planning. They can provide insights specific to your situation and help refine your calculations.

Remember that retirement planning is not a one-time activity; it requires periodic review and adjustment. Life circumstances, such as health issues or unexpected expenses, may necessitate modifications to your retirement plan. By regularly revisiting and refining your calculations, you can stay on track to achieve your retirement goals.

In conclusion, calculating your retirement needs in future dollars involves considering your current expenses, adjusting for inflation, estimating your retirement duration, and accounting for income sources and investment returns. By following these steps and seeking professional guidance, you can create a solid plan to secure your financial future. To learn more about this topic, tune in to episode 431 of the “Your Money, Your Wealth®” podcast.