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How Much Money Do I Need To Retire?

Posted by Shanna Tingom, AAMS® on Dec 7, 2015 2:06:11 PM

I often meet with people who are ask, “How much money do I need to retire?” While there are some rules of thumb, it is dependent on a variety of factors including lifestyle, healthcare costs, inflation, age at retirement, amount of savings at the time of retirement, and any pensions or other retirement income you may be eligible to receive.

Factors to Consider

Because of factors like inflation and healthcare costs, your dollars save today may not buy you what you need in the future. It’s important to work with a financial professional like Heritage Financial Strategies to understand the impact on your retirement planning.

Good Morning America conducted an informal survey about retirement planning where they asked people about the importance of saving for retirement, if they were saving, and how much they were saving. While nearly 90% of respondents said saving for retirement was a must, half of them also said retirement planning was confusing.

That means financial professionals like me have a lot of work to do educating and assisting their clients on investment education and planning!

Are you taking advantage of your employer match?

If you’re not, you should be. It’s free money from your employer.

At the very least, consider saving enough to get your employer’s match. For example, if they match $.50 for every dollar you save, you can turn your $6,000 investment into $9,000 ($6000 by you + $3,000 employer match) by doing nothing more than meeting the minimum requirement for an employer match.

What does that mean? It means you’re saving more and faster than you would if you were saving on your own.

Does age matter when it comes to retirement savings?

Yes, your age matters!

If you’re close to retirement age (65+ years old), we need to review all of your investments to be sure you’re invested appropriately for your goal of being able to retire. We want to protect the money you’ve saved.

Your age determines how much you can save in a retirement account like a 401k. If you’re over 50 years old, you can invest up to $24,000 a year into a 401k versus $18,000 if you’re under 50 years old. (This is subject to change. Check with your financial professional.)

You may also be eligible for pension, Medicare, and other benefits at the time of retirement.

What type of lifestyle do you want when you retire?

It seems wild to think about what you want to do when you retire but you need to have an idea so you can have the money saved for later.

Do you have retirement savings accounts with former employers?

When you leave an employer, it’s a good idea to have your account reviewed by a financial professional to determine the best course of action. There are times when the best option is to roll your account over to a traditional IRA. There’s no penalty as long as the money is transferred directly from one account to another.

If you have accounts with employers, want your current retirement investments reviewed, or want to get started saving, contact Heritage Financial Strategies to make an appointment. We make money fun!