How much do I need to retire?

By: Derek Hess

We get this question all the time! Most people are looking for us to give them a dollar amount they should be aiming for or at least get a sense of how to measure their progress. Coming up with a ballpark number is easy (and you can typically find those answers with a quick Google search!) But general advice will only get you to a certain point.

In our opinion, a lot of financial questions, this one included, deserve a customized answer. Articles about retirement don’t know what your specific retirement vision is and calculators aren’t going to ask you any questions that help you figure that out. So we can’t answer the question “how much do I need to retire” without exploring the factors that are personal to you. Here are a few things we like to consider:

• What is your retirement budget?
  (This takes a bit more work than reviewing your annual budget because you have to look into the future. Will have mortgage/debt payments? Will you need to cover any Health Insurance premiums before Medicare kicks in? Will your expenses change over time?)
• Consider your income sources and if they meet your budget needs.
  (For most people retirement income is a combination of Social Security, Pensions, Part-Time Income, and any short-fall is made up using their nest egg, which can include retirement account like a 401k or savings accumulated elsewhere.)
• What are your goals? It’s one thing to just get by and another to plan for specific goals. (Do you want to travel, support family members, pay for grandchild’s education, make a large purchase like a boat or vacation home, or do any charitable giving?)

With almost endless variables to consider, “how much do I need to retire?” quickly turns into a loaded question!

When people are on the cusp of making important decisions, but feel unsure or overwhelmed, is often when they start looking for a financial planner. At its core, a financial plan is a tool that communicates whether your resources can support the retirement vision and goals that are important to you. A CERTIFIED FINANCIAL PLANNER™ professional can act as a guide that helps you explore all the paths so you walk away with a solid understanding of your finances and the opportunities available for your specific situation.

These are the questions and situations we are passionate about helping people with. Ballpark numbers are a great place to start, especially if retirement is more than 15 years out, but it doesn’t hurt to put more thought into what you’re actually aiming for and begin visualizing that as you get within a 15 year horizon of retiring.