8 Questions to Consider So You Can Retire Comfortably
By Greg Gohr
What does your ideal retirement look like? Traveling the world, spending time with family, new hobbies? Maybe it’s a little of all of the above. So, how much money do you need to retire comfortably? The answer may surprise you.
Whatever your retirement goals, it’s important to have an idea of how much they will cost. The following questions can help determine your magic number for your unique retirement.
#1: What’s Your Ideal Retirement Date?
Your age (now and in retirement) is a significant factor to consider when determining how much to save. Retiring early means fewer years to save for a longer retirement. And if you start claiming Social Security benefits before full retirement age, you’ll have to factor in a smaller monthly benefit amount.
The stock market can also play a role in how much money you need and how long it lasts. You have a 31% higher chance of running out of money if you retire near or during a bear market. You don’t know if you’ll be in a bear or bull market when you retire—but you must account for this scenario when planning.
#2: What Do You Want Your Retirement to Look Like?
Have you thought about the type of lifestyle you want in retirement? If you want to travel or take up new hobbies, factor in what that looks like and how much it will cost.
Even if it’s simply spending time with grandkids, you’ll still need to think through expectations and expenses. Whatever you want to do with your time, map out the details to get a clear picture of how much you’ll need to make it a reality.
#3: Will You Earn an Income in Retirement?
Working during retirement is a great way to stay active, keep your mind sharp, and maintain a sense of purpose. Some retirees choose to build a second career through consulting. Others decide to pick up a low-stress, part-time job at a family office or retail store. No matter what you do, if you plan to work during retirement, you won’t have to save as much to live comfortably.
#4: How Much Debt Do You Carry?
Bringing debt into retirement reduces cash flow for housing, travel, hobbies, and other non-essential purchases, and potentially drains your retirement savings quicker (meaning you may run out of money or have to adjust your lifestyle down the road).
If you carry debt, determine how much cash flow you’ll need in retirement to cover these expenses. Some people prefer to pay off any high-interest consumer debt before they retire; others will pay down their mortgage and auto loans too.
#5: What Kind of Healthcare Coverage Do You Expect?
Right now, you most likely have health insurance through your employer. When you stop working, you may be able to hop on your spouse’s plan if they’re still working or get coverage through the healthcare marketplace. You qualify for Medicare at age 65, but you may want additional coverage for prescription drugs, dental care, eye exams, etc.
Retirees will use approximately 15% of their income for health expenses, and the average retired couple could see healthcare expenses of about $300,000 after age 65. Don’t let this be a planning oversight that prevents you from retiring comfortably!
#6: Will You Have Any Dependents?
Your kids may be out of the house when you retire, but that doesn’t necessarily mean you’ll stop supporting them financially. Over 79% of parents still give financial support to their adult children, and COVID-19 caused a boomerang effect (67% of adult children still live with their parents after returning home in need of financial help).
Even if you don’t help your kids out with daily expenses, you may want to contribute to their weddings or down payments on home purchases down the road.
#7: Where Will You Live?
Housing may be your biggest retirement expense. Even if your home is paid off, you might want to consider downsizing to a smaller place with less maintenance and cheaper utility costs. To save even more, think about relocating to an area with a lower cost of living.
#8: What Is Your Family’s Health History?
While life expectancy is unpredictable, if your family has a strong history of living to age 90 and beyond, your chances of living that long are greater and you’ll need to determine if your planned retirement savings will last long enough. You also need to consider if you have known health conditions and/or a family history of health problems that could affect your life span.
Your Unique Retirement Needs a Unique Plan
Retirement calculators don’t always apply to your unique situation; rather, your magic retirement number requires a deep dive into your financial situation, family history, and goals.
FSA Wealth Management can help you grow and protect your wealth by looking at the whole picture of your financial life. If you’d like a partner to help you determine how much you need for your ideal retirement, we’d love to work with you. Contact us today at 781-455-1020 or email firstname.lastname@example.org.
Greg Gohr is a Wealth Advisor at FSA Wealth Management, a Registered Investment Advisor firm offering fee-only services and known for its independence, objectivity, and results. With over 20 years of industry experience, Greg has extensive knowledge in all aspects of advisory platform business and specializes in helping individuals, families, small businesses, and professional organizations realize their financial goals. He desires to empower his clients’ financial well-being through the delivery of customized wealth strategies through every phase of the long-term journey. Before joining the financial services world, Greg spent the first 10 years of his professional life pursuing his lifelong dream of playing Major League Baseball. Like many professional athletes, his playing career was much shorter than he would have liked. After brief stints coaching at both the professional and college levels, Greg embarked on a career in financial services, determined to synthesize his lifelong interests in personal finance, investing, and coaching.
Greg graduated from Santa Clara University and completed his CERTIFIED FINANCIAL PLANNER™ coursework at Merrimack College and holds the Accredited Investment Fiduciary® designation. Outside of work, Greg, his wife, Kristen, and his dog, Sammy, aspire to climb all 48 4,000-footers in New Hampshire (they’re about halfway there!). A former rock-skipping champion of Waterville Valley, NH, Greg thinks bicycles are one of the most important inventions in human history and believes pizza is proof of intelligent design in the universe. His least favorite workplace memory is giving up back-to-back-to-back home runs in front of a sold-out stadium in Cleveland, he has a true gift for annoying his adult children—Jack, Hannah, and Kathryn—by constantly preaching the virtues of compound interest, and he is grateful to serve his community as a member of the Knights of Columbus. To learn more about Greg, connect with him on LinkedIn.
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