I’m sure you’ve asked yourself the question as many of us have. How much money do I need to retire? Or retire comfortably, that is?
Trying to figure out how much you need to retire can be one of the most difficult financial decisions you ever make. Your entire retirement planning process needs to start with the right goals in order to construct the right plan and portfolio.
While Social Security is a vital part of your retirement planning, it can hardly be counted on for much of anything anymore. With the average payout being around $1,300 a month, you need to ask yourself where else your income upon retirement will be coming from.
There are many ways to estimate what you will need for retirement and many people will tell you different things. With more and more influences and sources available, choosing the right financial professional to make your goals a reality continues to gain precedence.
The retirement planning process can be one easily ignored because the questions and realities we must ask ourselves are not easy. When working with an RIA or registered investment advisor, your best interest is a legal obligation of theirs. One of the reasons many prefer RIA’s to other financial professionals is because of their vested interest in you. This allows them to have those tough conversations with you – what sacrifices may need to be made, what realities you should expect, and so on, in order to get to a place of financial comfort in your retirement years.
If the million-dollar mark seems outrageous and unattainable, ignoring the fact and deciding to procrastinate is the worst thing you can do. No matter how old you are, trust that it is never too late to put some savings back for retirement. If you are not sure where to begin, we would love to offer you a free consultation, helping you understand what should be considered.
There are many credible sources available online to research general retirement plans but common guidelines are just that – guidelines. Everyone is different and so are their needs in retirement. Getting in touch with the right financial professional and getting specific to your lifestyle can go a long way in reassurance and effective planning.
Three common guidelines for estimating a retirement planning goal:
15% Rule: If beginning early, in your 20’s or 30’s, saving 15% of your income per year should give you enough to live comfortably in retirement, inflation and all considered.
25% Rule: Calculate your estimated expenses in retirement and project to spend that for 25 years. The logic behind this calculation is that you can withdraw 4% of your nest egg each year without being in danger of losing your money.
70% Rule: It suggests to plan on needing roughly 70% of your average income during your working years for retirement years.
Again, these are common guidelines, they shouldn’t scare you if you haven’t begun saving yet or aren’t putting as much away as suggested. It is a good reminder regardless of your current efforts towards retirement planning; this is a conversation you need to have.
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As with most everything, retirement planning has become more complex and achieving your goals usually requires several avenues. Where to invest your money, what insurance products to have, how many income streams you have – and so on, all come into play when establishing and executing proper retirement goals.
Reaching out to the right professional can go a long way for your future stability and your current stress.