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May 2010
Retirement --- How Much Is Enough?
When it comes to your savings needs in retirement, there are some key questions you should be asking yourself:
# 1 - What do you visualize for your retirement?
Does your ideal retirement life look a lot like the one you have now? Or would you hope to step it up a notch? On the other hand, you may crave the idea of an earlier retirement even at the expense of a lower standard of living. There's no right or wrong answer, but your anticipated retirement lifestyle is a critical component in answering the "How much savings will I need?" question.
# 2 - What do you make today?
Your current income is a useful starting point for calculating your retirement savings needs. Odds are that the more you make today, the more savings you'll need in retirement --- because your lifestyle today is likely driven by how much income you bring in while you're working.
# 3 - How much will you collect from Social Security? Will you receive any defined benefit pension benefits during retirement?
These monthly payments can subtract substantially from the amount you may have to save. Getting a good estimate is very useful as you plan your retirement and determine your savings need. This is relatively easy now that the government sends out an update of your benefits three months before your birthday every year. While potential legislative changes to Social Security could affect your benefits, these reports can be a guide for you to determine your required savings.
# 4 - When will you retire?
The younger you are when you retire, the longer you can expect to live during retirement. If you delay retirement, not only will you be retired for a shorter amount of time, but you will also work more years.This gives you time to bulk up savings. Working longer also means collecting more from Social Security benefits when you actually do retire.
# 5 - How will you invest?
Diversify your investments. Don’t put all of your eggs into one basket. Sound advice, yet people often don’t follow it. It is easy to get caught up in your investments when the market is doing well, and chasing those big returns may seem like a good idea. Without proper diversification you are subjecting yourself to higher risk with only a potential for better returns. A properly diversified portfolio will help you minimize your risk while maximizing your return.
#6- How much have you saved already and how old are you now?
The younger you are and the more you have saved, the less you'll need to save in the future in order to achieve the same retirement standard of living as someone older or with less money saved up until this point. The early bird gets more than the worm.
Let us assist you in answering these questions and help you make a road map to retirement. Please call me at 1-888-325-9826 or email me gscott@wabashcapital.com