If you’re unsure about how much retirement savings you need to build, you’re far from alone. A recent survey found that nearly half of all Americans took a shot in the dark and guessed their number.
Even if you’re not relying on complete guesswork to determine your required retirement savings, the information out there can be dizzying, and often utterly contradictory. Take the oft-repeated advice that “you need a million dollars to retire,” for instance – some experts say it’s too much, while others say it’s far too little.
So how do you actually start to determine you required nest egg, and most importantly, know if it’s the right number? Here are some starter points:
Don’t use one-size-fits all or rule of thumb advice
Your financial goals and needs are just as unique as the rest of your life. So while it would certainly be wonderful to have a perfect solution for everyone, it’s simply not realistic. Going back to the million dollar example, an investor could be woefully underfunded if they had a pricey active lifestyle in retirement, and only a million in their account.
Instead, create a retirement roadmap
What we call a retirement roadmap is really similar to any other roadmap. Just as one would need directions to drive from California to New York, you’ll want to map out the specific final goals for retirement, and create a well-crafted plan to get there.
You can start by determining your retirement needs. Ask yourself questions, or begin a dialogue with a financial advisor: when do you want to retire? What sort of lifestyle in retirement do you plan to have? Creating a patchwork of anticipated needs in retirement can help you hone in on a specific number needed.
Plan for longevity
Another useful point in determining your retirement savings is exactly how long you need them to last. On average, humans are living a longer lifespan than ever, and while this is great overall news, it means your retirement savings will also most likely need to be larger than ever. Rather than guessing the length of your retirement, we recommend that investors plan conservatively, to ensure they have enough wealth stowed away for the longevity of their golden years.
At LexION Capital, we work individually with each of our clients to help them achieve a worry-free retirement. Want to learn more about how we can craft a solution to fit your unique goals and needs? Contact us today.
