By Laurel Kutler, CFP®
The likelihood of realizing your retirement goals often depends on having a solid retirement savings plan in place. And the real question to ask is whether those savings can last all throughout your retirement. Even sizable accounts can be quickly depleted by unexpected costs, changes in lifestyle, or market swings.
So, how can you determine if your retirement savings will truly carry you through your retirement years? It takes more than simple calculations. You need to take a close, detailed look at the lifestyle you want, your current savings, anticipated expenses, and potential income sources.
Let’s break down the key steps to accurately evaluate whether your retirement savings can support the retirement you imagine.
When Do You Want to Retire?
The first thing to consider when deciding how much money you need to save is your age, both now and in retirement. If you wish to retire early, you have fewer years to save for a longer retirement. Additionally, if you begin receiving Social Security payments prior to reaching full retirement age, you’ll have to account for a lower monthly payout.
The state of the stock market can also influence how much money is required and how long it lasts. Of course, you can’t actually predict the state of the stock market when you retire, but it’s still a wise idea to plan for the possibility of retiring in a bear market.
What Type of Lifestyle Do You Envision for Yourself?
Have you given any thought to the kind of retirement lifestyle you want to live? If you’re certain you want to travel, play golf, or spend time with your grandchildren, consider what that entails and the associated expenses.
For example, if you intend to travel, ask yourself the following questions:
- Do I want to travel abroad or domestically?
- How frequently would I like to travel?
- How would I prefer to travel? (e.g., car, airplane, or RV)
- Where would I like to stay? (e.g., a five-star hotel, an Airbnb, or with family members)
- Do I want my family to join me on the trip? Do I plan to cover their expenses too?
- Can I continue to live at my primary home? If so, who can watch my house and maintain it while I’m traveling?
Even if your dream is simply to spend time with your grandchildren, you should still think through the associated costs. To some, spending time with grandkids means babysitting a few times a week. For others, it means footing the bill for various trips for the entire family.
Either way, plan out the specifics of your vision so you can see how much money is needed to make that dream a reality.
What Is Your Current Debt Level?
Let’s talk about another retirement-income influencer: debt.
There are two significant drawbacks of taking on debt in retirement:
- It reduces your cash flow for non-essential items like housing, travel, and hobbies.
- It can deplete your retirement funds more quickly, meaning you might eventually run out of money or have to change your lifestyle.
If you carry debt, a smart move is to carefully examine your debt and determine how much cash flow you need in retirement to pay for anticipated expenses.
Before they retire, some people prefer to pay off any high-interest consumer debt. Some even go so far as to pay off their auto loans and mortgage.
Are You Planning to Work in Retirement?
One of the better ways to stay active, keep your mind sharp, and feel purposeful after retirement is to work.
Some retirees decide to pursue consulting as a second career. Others choose to take a part-time, low-stress job and work at a retail store or family office.
Whatever you decide, you won’t need to save as much to live comfortably if you plan to work after retirement.
Get Guidance on Your Retirement Savings
Evaluating your retirement savings means taking a close look at your finances, lifestyle needs, debt, and long-term goals.
At ABLE Financial Group, we focus on your unique objectives, including how much you’ll need to fund the retirement you envision for your future. By entrusting the details of your retirement plan to us, you can relax knowing your savings are being managed thoughtfully, with care and integrity.
To learn more about our team and the ways we can help guide you, call 480.258.6104 or email adam@ablefinancialgroup.com today.
About Laurel
Laurel Kutler is a Financial Advisor at ABLE Financial Group, a financial services practice that focuses on transition planning and simplifying the complexities of their clients’ wealth. Originally from a small town in North Carolina, Laurel is a graduate of the University of North Carolina at Charlotte. She earned a degree in communications with a focus in public relations.
Beginning her career as a financial advisor with Edward Jones, Laurel is driven by a combination of passion for finance and a commitment to make a positive impact on individuals’ lives. She saw financial advisory as a unique opportunity to empower others with the knowledge and strategies needed to secure their financial futures.
Laurel specializes in working closely with 401(k) plans and their participants, as well as assisting divorcees and widows. She brings energy and enthusiasm to solving client needs and often with the empathy needed to help them navigate difficult situations.
Currently residing in Scottsdale, Laurel has diverse interests outside of her professional life. She enjoys hiking, hosting dinner parties for friends, and takes pleasure in traveling whenever possible.
