In the financial planning world, each client is unique. And yet, we hear one question over and over” How much do I need to save for retirement?”
Without knowing you, your lifestyle, your goals, and many other factors, it would be impossible to put a price tag on your retirement. However, we can share with you another method of determining your retirement income needs, that might actually be more helpful in the long run. Instead of asking how much money you need, ask yourself, “How long will I need a retirement income?”
Once your career has ended, you want to relax knowing that your lifestyle needs are covered for the rest of your life. The problem is, none of us know how long we will live! But, here is what we do know.
Back in 1900, the average life expectancy was about 50 years. “Retirement planning” wasn’t really a thing most people did; they worked as long as possible, and perhaps lived off of savings or relied upon their families if they become ill or fragile.
Today, the average life expectancy is about 85 years, and it continues to increase. We can thank better nutrition and medical technology for that. But of course, a longer lifespan means we need to plan carefully for retirement.
Your family history might offer some clues. Do you have many older relatives who lived long lives? If longevity is common in your family, you might expect to live beyond the average lifespan.
Next, ask yourself when you plan to retire? Back in 1950, the average retirement age was 68. Today, it is 62. We’re living longer, but we’re retiring earlier!
Asking yourself those questions can help you understand how long you might need a reliable source of retirement income. Then, together we can arrive at a reasonable savings goal to help you achieve 20, 30, or more years of stable revenue.
Give us a call, and we can help you ask (and answer) these questions.