Retirement is supposed to be the light at the end of the tunnel, but how do we get the goal posts to stop moving?
With markets continuing to roller coaster, one of the big questions keeping people awake at night is, “Am I okay?”
The unknown is frightening. For most of us, money is withdrawn from our monthly paycheck and placed in a retirement account. We don’t think about it or maybe we envision it stockpiling in some imaginary warehouse like Scrooge McDuck’s money pit.
When markets soar, no one asks about it, but when we see a headline about a dip in the S&P 500, suddenly all we can think about is, “Am I good?” or “What is my number for retirement?”
Before you consider how much you need, you need to decide how much longer you plan to work.
For pre-retirees, which means anyone over the age of 50, now is a good time to decide when you plan to retire. The next 10 to 15 years will dictate how much you need to save.
Once we understand timing, we can then take a look at your budget, your income sources, and how the pace of inflation could impact these numbers.
Then, we can analyze your health, your family situation (are you caring for your parents or adult children?), and whether or not you plan to work in retirement.
After baking in Social Security and required minimum distributions, we can analyze the data and figure out how to fill the gap. This process is all about developing a plan to help you thrive to and through retirement.
We use eMoney’s financial planning tools to help illustrate how much our client need in today’s dollars to retire. From there, we work to develop a plan.
For example, let’s say as an example the projections show that you are going to run out of money at age 82. Typically, we plan so that you have enough money to live to 95. So, knowing we have a 13-year bridge, we ask “how do we fill that gap?”
The answer is one of four things: Work longer, save more, spend less, or invest better.
Clients love the fourth option, but there is only so much that the markets can do. We try to show how potentially working for five to seven more years can help.
So let’s go back to your original question that kept you tossing and turning in bed: “Am I okay?” The truth is it is hard to answer because there are so many variable to consider: time, budget, family, health, etc.
We all look at retirement as a finish line, but in reality it is a new beginning with new opportunities and challenges. Preparing for retirement means preparing for three decades of possibilities, vacations, food shopping, medical expenses, and family moments.
So step back. Look at the big picture and remember that time spent planning is time well spent