How Much You Really Need to Save for Retirement

Many people save for retirement almost their entire lives and still do not feel the sense of confidence and relief they should when thinking about retiring and being financially covered. However, many of my clients feel more secure when they learn exactly how much they need to save to live the retirement lifestyle they desire and they create a plan to achieve it.

Retirement plans can vary from person to person. If you live a very simple lifestyle, don’t have plans to travel, and you prefer to be in your “home-oasis,” you may require significant less savings than another person who plans on traveling the world or going on cruises a few times a year. No matter where you fall on this spectrum, there is a retirement strategy to ensure you live comfortably in retirement.

Considering all expenses when calculating your retirement savings goal

Your total retirement savings goal depends on the expenses you expect to face in retirement. It is important to look at what debts will be paid off by the time you retire and what existing expenses you will continue to be responsible for, as well as any new costs you anticipate, such as more travel or support for a grandchild’s education. Everything from simple monthly utility bills, credit card payments, health insurance, car payments, and so on need to be factored in when you create your retirement income goal. Tracking all your expenses over time can help you ensure you don’t leave any out. Additionally, consider which debts you can either pay down or completely pay off before you retire to help increase your cash flow once you do retire.

Considering all income sources when calculating your retirement savings goal

Income is also a very important component to examine in retirement. If there is a shortfall in your monthly cash flow, it is important to have a plan in place to know what bucket of retirement dollars to take from. Verify what income streams will be coming in so you can give yourself a comparison of your income versus your expenses. Does your employer offer a pension? Have you ran your most recent Social Security estimator to determine what your Social Security payment will be? By examining your Social Security payment, you can see when you are considered full retirement age (FRA) and how much your payment can grow with additional years deferred before you do reach FRA.

Additional considerations

Once you track all your expenses and calculate your total income, you’ll be closer to determining that magic retirement savings number you need. Once you determine this number, it is also important to account for additional factors that will adjust over time, such as inflation, market corrections, and required minimum distributions (RMDs), to name a few.

A great way to ensure all of these factors are accounted for is to work with a trusted financial professional. A financial professional can help you put together your own, personal financial plan that is tailored directly to you. It is never too late to start making your dreams of retirement come to fruition, and maybe even sooner than you thought possible!

Jason Egge is a Financial Advisor with Securities America Advisors, Inc. Securities offered through Securities America, Inc., member FINRA/SIPC. Bankers Trust, BTC Financial Services, a division of Bankers Trust, and Securities America are separate companies. Check the background of this investment professional on FINRA’s BrokerCheck.

Not FDIC Insured. No Bank Guarantees. May Lose Value. Not a Deposit. Not Insured by Any Government Agency.

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