You may be asking: Am I on track for retirement? What is the perfect amount I should have in my nest egg to retire? A good early retirement planner will give you guidelines to follow and a ballpark estimate as regards that question, “How Much Do I Need for Retirement?”
How Much Do You Need for Retirement?
Generally, you want to plan for retirement based on the amount of money you’ll want to withdraw in the first year. Do you know that number? Maybe you currently spend $5,000 per month on your dwelling, auto, food, insurance, fun, and other monthly expenses. Do you expect anything will be different when you retire? Some people downsize, some people need to start paying more for medical. Know your number for that first year and multiply it by 25. That’s the TOTAL amount of money you should have set aside. Who says? This was from an article I recently read from a Charles Schwab publication.
Now if you quickly run your numbers, you will either be celebrating or sweating bullets. Are you anywhere close to where you need to be to retire at this level of expenses? If you’re not, keep reading because we might have just the solution for you. If you’re celebrating with more assurance now than ever that retirement is in the cards for you – you probably don’t need the rest of this article. We would hope that you would pass it along to someone who may be in the sweating bullets category!
Are You on Track for Retirement? Are you …
A) Ahead of the Pack and Ready to Retire
If you’re ahead, pat yourself on the back! Do look at the numbers again just to be sure! Don’t stop saving because the market can turn on a dime. Maybe you want to consider an earlier departure from the workforce into a more leisure-filled life. Remember that comes with a price tag, too.
B) Right Where You Should Be, Doing Better Than Most
If you’re on track you must certainly keep up the good work! You might want to ask the question, “Can I save more?” It would be great to have a little more of a cushion just in case some unforeseen expenses come along. It is also good to review your investment portfolios regularly to make sure no adjustments are needed.
C) Falling Behind and Unsure What To Do About It
If you’re behind don’t freak out! You will definitely need to do something. Is there something in the budget that can be reduced? Do you have ways of making additional income? Can you save more now by cutting out the excess in your budget? It may be as easy as a reassessment and setting new goals.
Whatever you do, don’t be discouraged. We have put together a great 8-step program to help people in the “falling short” category. Many people, us included, never imagined not having enough saved for retirement until it was a reality. It is also very like that those same people have probably never considered ways to make extra money from doing things they love or sharing their experience.
We call this “Monetizing Your Gifts.” God has gifted us all. Some of us have spent our whole lives working a job for someone else, doing something we absolutely adore. We were using our gifts. Others of us worked our whole life in a job that just paid the bills. Our passion was in something else, maybe music, art, crunching numbers, sports, using our hands, etc. Either way, we have a wealth of knowledge and passion to share with the world.
What Are Some Next Steps?
By now, you’ve got an idea on how to answer the question, “How much do I need for retirement.” Having the answer alone should give you a bit of clarity. Do you need to save more or are you ready to give your boss notice? Either way we suggest you have a clear picture of what retirement looks like and what you are actually dreaming of when you are able to walk away from your job or career. When we know what we are retiring “TO,” it makes it all the more fun to want to get there.
We have our own retirement planner we call the Ideal Retirement Questionnaire. It helps you think through the retirement of your “dreams” while you are still in the planning stage. You can then plan with a clear future in mind. You may be able to retire sooner based on the information you gather in this questionnaire. Simply apply it to your budget and accumulated savings and see where you are. Just click the following link to get your own Ideal Retirement Questionnaire.
If you or someone you know is in dire straits needing some direction because the shortfall seems too great, reach out to us HERE and ask about the 8-week program called “Your Bridge to Retirement.” We are currently between sessions and accepting applications on a wait list.