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Plan now to ensure a secure retirement

You’ve heard how important it is to save for retirement. If you are wondering how much is enough, you’re not alone. Determining what your expenses will be years from now can be a challenge, but with some careful planning, you can achieve a secure retirement.

The following advice from the Maryland Association of CPAs will help get you started.

Establish retirement goals

When you envision your retirement, what do you see? Quiet time at home with your family or worldwide travel? Puttering in the garden or spending your days on the golf course? Working at a part-time job?

Many CPAs suggest that you’ll need about 70 to 80 percent of your current annual income to fund a comfortable retirement. But to a great extent, how much you will need depends on your lifestyle goals and the costs associated with them.

Estimate retirement expenses

First, analyze your current spending habits. Even though your expenses will change in your retirement years, an accurate picture of your current expenditures serves as a helpful baseline for estimating future needs. Then consider how your expenses may change during your retirement years, estimating those that will increase and those that will decrease. For example, if your mortgage will be paid off and your children’s tuition covered, your income needs will be significantly lower.

Retirees don’t pay Social Security payroll taxes, and expenses such as business clothing, commuting costs and business lunches are eliminated. And with reduced income, you might even find yourself in a lower tax bracket.

Alternately, expenses such as health care and health care insurance are likely to increase as you age. And with more free time, chances are, you’ll spend more on entertainment and leisure activities. Utilities, car and homeowners insurance costs, and gifts and contributions will probably stay about the same.

Consider inflation

Don’t forget that the cost of living will continue to rise in the years leading up to and during your retirement. While it’s difficult to predict what inflation will be, it’s helpful to know that prices have risen about 3 percent per year for the past several years, and the average increase in the Consumer Price Index for the past 30 years has been 5.4 percent.

Decide when you will retire

To calculate your total retirement needs, you also have to estimate how long you will be retired, since the longer you are retired, the more income you’ll need. If you’re considering taking an early retirement, think about what you’ll give up. for many workers, the final years of employment are the highest-earning years of their careers.

Estimate your life expectancy

Another important factor which must be estimated is your life span. A longer life means that you’ll have even more years of retirement to fund. Government statistics, life insurance tables, or an online life expectancy calculator can help you arrive at a reasonable estimate of how long you’ll live.

Remember, these are only estimates based on age, gender, health, lifestyle, occupatio, and family history.

Consult with a CPA

A secure retirement doesn’t just happen. It can be achieved only by anticipating future financial requirements. A CPA can help you calculate your needs and devise a plan for funding your retirement.


Only CPAs are equipped to address your full range of financial needs with integrity and insight. In Maryland, CPAs must pass a rigorous two-day examination, adhere to strict ethical and professional standards, and, beyond college, complete 80 hours of continuing education every two years to be certified by the state — accountants do not.

Your doctor is certified; your lawyer is certified. Make sure your accountant is a certified public accountant.

For CPA referrals in your area, contact the MACPA at (410) 296-6250 or click here.

The Maryland Association of Certified Public Accountants (MACPA) is a statewide professional association that provides leadership, information and services for its nearly 10,000 CPA members, who are employed in private practice, industry, government and education. CPAs are business and financial professionals who have passed a rigorous two-day examination in order to be licensed by the state. CPAs are committed to protecting the public interest, and must adhere to stringent ethical and professional standards and continuing professional education requirements.