How Much Do I Really Need for Retirement?
In years past, $1 million was the minimum amount to have saved for a comfortable retirement. But you may ask yourself, "How much do I really need for retirement?" And for some, depending on where you live, your lifestyle, budget and other factors, that amount may still ring true. However, for many, $1 million is not going to be nearly enough. In addition to the factors mentioned, there are others that can affect your target number. Do you own a home? Do you have family members nearby? Does longevity run in your family? And sometimes most importantly, how is your health? These influences, along with common household economic issues, present extra considerations when trying to save successfully for retirement. It’s been reported by GOBankingRates.com that depending on where you live, retirees could go through $1 million in as little as 12 years and that Americans should plan to spend 22 years in retirement if planning on retiring at age 63.
So, you ask, how much is enough? As much as you can is the usual advice, but here are some things to consider to get started:
Do you own your home?
How are your current investments performing?
What are your current debts and interest rates?
Do you or will you have any medical issues or needs?
Do you or will you have kids going to college?
What are your plans for retirement, do you plan to downsize, relocate or travel?
The answers to these questions can greatly influence your projected numbers, be realistic and objective.
The industry standard recommendation of the 4% rule means that you should be able to live at your current standard of living during retirement by withdrawing 4% from your retirement accounts annually.
So, using the 4% rule:
If you are currently making $100,000 per year and want to retire at age 67, your goal would be at least $2,500,000.
If you are currently making $250,000 per year and want to retire at 67, your goal would be at least $6,250,000.
If you are currently making $500,000 per year and want to retire at 67, your goal would be at least $12,500,000.
The numbers can be intimidating. Do your homework, project realistically on necessary household expenses, possible housing and healthcare needs as well as the type of lifestyle you want. And you may want to consider the benefits of getting a professional involved. Successful retirement planning can not only be complicated, but trying to manage it on your own can cost you money. Studies have shown that working with a fiduciary investment advisor increases your chances that you will achieve your savings goals. It has also been shown that guidance from an advisor can bring an additional 4% - 6% in returns annually.
One of Nollenberger’s specialties is helping people who are falling short of their retirement goals develop a “catch up” plan. We are knowledgeable and experienced in guiding you through this process to achieve success. We are here for you, every step of the way. Even if you feel that your investments are performing adequately, we can help maximize your returns and develop a plan that works for your unique situation.
Call us if we can help with questions or advice. 415-287-5100, or email contact@nollmac.com. You can also use our Contact form on our website.