How Much Money Do I Need To Retire?

Retiring comfortably doesn’t just happen on its own. It takes strategic planning, and oftentimes a coordinated effort with a professional financial advisor focused on turning your vision into an eventual reality. The most common concern for anyone looking ahead to retirement involves understanding how much money is needed to truly pull it off. And there isn’t a one-size-fits-all answer. Retirement looks different for everyone and is shaped, most often, by lifestyle preferences, goals, and family dynamics. 

By gaining a better understanding of how certain financial buckets potentially impact a retirement nest egg, those looking ahead to retirement may find some clarity on the level of financial support they will need to realize the future they envision.

Savings

A good rule of thumb is to put 15% of every paycheck earned into savings. Savings accounts have their limitations, and their interest rates don’t keep up with inflation. That’s why it’s important to look at savings as a pool of funds readily available in case of emergencies. Beyond that, it is recommended that the rest of an individual’s funds be invested in a more diversified way.  

Social Security

On average, Americans need to work for at least 35 years to access  Social Security benefits. But those payouts will not be enough to survive alone, especially since those payouts are averaged in accordance with an individual’s overall earnings. The good news? The Social Security Administration announced that there will be a nearly 6% cost-of-living adjustment increase in 2022, marking the largest increase in nearly 40 years.

Traditional and Individual Retirement Accounts 

Enrolling in an Employee Savings Plan or a Health Savings Account, especially if an employer offers them as part of their benefits package, is highly encouraged. Thrift Savings Plans and 401K plans are most commonly offered by employers. With these plans, employers will match employee contributions up to a certain amount. Contributions are taken out of an individual’s paycheck before federal income taxes are withheld. While HSA accounts — which stay with an individual even if he or she changes employers — aren’t retirement accounts, they can help pay for healthcare expenses when an individual does retire. The earlier an individual invests, the more time that investment has to grow.  

Financial Advisor Led Retirement Investing

A credentialed financial advisor can do wonders in leveraging financial tools to an overall retirement plan. An advisor will actively work to curate a strong investment portfolio and routinely keep it updated to make sure the client is on target to reach his or her goals while factoring in inflation and market fluctuations. Some services that financial advisors provide include:

  • Purchasing annuities
  • Life insurance
  • Growing an emergency fund
  • Maximizing retirement plan contributions
  • Diversifying an investment portfolio with a variety of stocks, bonds and mutual funds.

Get Started with Rosevest FinancialReady to strategically plan for your retirement? Call us for a complimentary consultation. We’re happy to answer any questions you have.