It doesn’t matter if you’re just starting out or getting a late start with financial planning for retirement. All of it can look confusing before you have a plan, regardless of where you are in life.
But you shouldn’t let the complexity of the details intimidate you. Retirement is one of the loftiest goals that you’ll ever reach for. But people make sensible, workable plans every day, and so can you.
Here are the basic questions you need to figure out in order to come up with a secure plan for your retirement.
The Foundation of Your Retirement Plan: How Much Do I Want To Spend in Retirement?
The foundation of your retirement plan is not when you retire or how much savings do you need to retire (those come later, see below). The first step is figuring out how much you want to spend.
You see, how much you want to spend will dictate when you can retire and how much savings you need. Do you want an extravagant life filled with travel, or are your tastes simpler? How will your spending change over time?
Budgeting 30 years into the future may seem daunting, but the Boldin Retirement Planner makes it easy. And, here are some additional insights to help you:
All the Other Questions that Go Into Planning a Secure Retirement
Most people try to start their retirement planning by asking: How much savings do I need? This is the wrong starting place for retirement planning. Not only do you need to know how much you’ll want to spend, you also need to figure out the answers to a lot of other questions.
For example, you’ll need less savings if you retire later. You’ll need more if economic factors aren’t playing to your favor. If you have a retirement job, that impacts how long your savings will last. Your retirement plan is a complicated inter related puzzle of various factors.
Let’s explore all the other factors beyond spending that go into planning a secure retirement:
How long will you be retired?
Your retirement date and how long you live are two dates that determine how long you will need to fund retirement. You have control over when you retire, but your longevity requires some guesswork.
Longevity planning resource:
When to retire articles:
What are my sources of retirement income beyond withdrawals from savings?
Do you plan to continue working to some extent, or will you leave the 9 to 5 permanently? When will you start Social Security? Will you have dividend or passive income? The more income you have, the less savings you’ll need.
Just like how your retirement spending will vary over time, it is also possible that your income will evolve as well.
While the Boldin Retirement Planner will help you with all of the calculations, here are a few resources to help you think about retirement income:
How should I be invested for retirement?
Your rate of return will influence how much you need and how much you are able to withdraw during retirement. You need to protect the savings you’ll rely on, but ideally you are able to grow your savings faster than the rate of inflation.
Here is some information on savings, investments, and withdrawals:
Are you prepared for the things that are going to go wrong?
Retirement planning requires making a plan for things that you can’t predict will happen. While that may sound impossible, there are known unknowns and preparing for the possibility of these factors will increase your confidence about your ability to fund your future.
Will you tap your home equity for retirement?
For most people, their home is more valuable than their savings. Tapping your home equity can be a wise way to cover retirement expenses.
Do you want to leave something behind for heirs?
Leaving an inheritance requires money above and beyond what you need for retirement, but it is a goal for many people.
So, How Much Do You Need for a Secure Retirement?
The answer to “how much do you need?” will evolve every time you change one of the levers listed above. The Boldin Retirement Planner will help you understand these levers and how it impacts your retirement savings needs.
And, you may be surprised to learn that you have actually saved too much and can retire earlier than you intended! (It is more common than you think.)
That’s why Boldin exists. We have the tools and resources to help you make the best and most educated choices, no matter how your situation changes through the years.
