Find out how financially prepared you are for retirement with this online tool that calculates your ‘retirement score.’
We’re all familiar with credit scores, and how much they affect our ability to purchase a home, obtain a good APR on a car loan, and obtain other lines of credit. Knowing what your credit scores are helps you to determine your financial health, and make changes based upon that assessment.
For example, if your scores are on the low end due to late payments or a high debt-to-credit ratio, those indicators guide you to make necessary changes, such as paying your bills on time without exception, and paying down as may credit cards as you can, starting with the smaller, more manageable balances.
Now, thanks to modern technology, there’s another type of score that can assess your future financial security, and it’s called the ‘RISE’ Score, which stands for Retirement Income Security Evaluation Score.
According to Alliance for Lifetime Income (the creators of the RISE calculator), the main purpose of this free online tool is “to provide you with an estimated measure of income security to help you determine whether you’re on track with your current retirement income plans.”
The RISE Score will help you find out if your retirement income will truly cover all of your monthly expenses.
The RISE Score is basically like a credit score for your retirement plan, with 0 being the lowest and 850 being the highest.
It provides an assessment of whether or not your retirement portfolio will provide enough money to pay your living expenses and medical bills once you stop working. It also gives important insights and suggestions that you can share with your financial advisor to improve your retirement planning strategy (such as implementing annuities, stocks, and so on).
Here’s how it works.
Before you begin, you’ll want to have these financial amounts ready:
> Your Current Monthly Income
> The Total Estimated Amount in Your Savings Account
> Your Monthly Living Expenses (mortgage, utilities, gas, groceries, etc.)
> Your Monthly Medical Expenses (including medical equipment, prescriptions, etc.)
> Your Estimated Social Security Amount
> An Estimated Total Amount of All Other Savings (pension, annuities, Roth IRA, 401K, etc.)
After you gather that information, you can set up an online profile. Then you’ll enter your approach to retirement savings (i.e. whether or not you plan to save a little, a moderate amount, or a lot). After that, you’ll enter your total retirement savings, including any bank savings account that’s specifically for retirement, as well as 401(k), 401(3b), Roth IRA, and/or Traditional IRA.
Next, you’ll add your estimated total pension and social security amounts that you expect to receive in retirement, as well as any other source of retirement income (such as annuities, rental properties, part-time employment, etc.).
You’ll then enter your estimated monthly living expenses and medical expenses. While it’s hard to know how much this will fluctuate, it’s a good idea to at least go off of what you currently spend every month.
The online tool will then calculate your RISE Score based on the financial information that you provided. If your score is above 750, it means that you should have plenty of funds to get you through your retirement years. If it’s below 650, it would be a good idea to speak with a financial adviser to see how you can improve that score.
As a bankruptcy lawyer in Louisville, Kentucky, I have many prospective clients who often worry that bankruptcy will ruin their financial future and derail their retirement plan. Usually, the exact opposite is true. Bankruptcy can actually help them get a financial plan in place, so that they’ll have enough money for retirement.
Paying off your debt in one monthly payment (Chapter 13) or discharging it completely without any repayment (Chapter 7) provides a second chance when it comes to saving for your (and your family’s) future.
If you have questions about how bankruptcy can be part of your long-term retirement plan, I’ll gladly answer them. I’m here to break down the stigma and misconceptions that surround bankruptcy, and it all starts by answering the most pressing questions.
Just remember that when you’re not being weighed down by debt, you’re able to focus on a brighter future ~ and you deserve that kind of hope.
All the best,
Tracy L. Hirsch
Louisville Bankruptcy Attorney
To set up a free consultation, text or call me at (502) 435-2593!