Over the course of my career I would say one of the top ten questions I am asked, if not top five, is; how much do I need to save for retirement? Or phrased another way, what is my magic number?
The answer to that question is; it depends.
Nobody likes hearing that answer but it is the truth. Figuring out how much you will need at retirement is a complicated topic and unless we are sitting at a table together I don’t think I can give you a precise number. But what I hope to accomplish in this guide is get you a number that is probably within the range of what you could need when you retire. The numbers you are about to see might concern you…retirement is not cheap. But with a good strategy and the determination to get there you can succeed.
We utilize a 4-Step process for retirement preparation that helps simplify your financial situation down to some basic information. As I mentioned before, this isn’t going to be an exact number but should be in the ballpark. As you get closer to retirement you will then be able to fine tune your strategy because you will hopefully have a better idea of what you want to do in retirement, where you plan to live and what your expenses are. My 4-Step process is this:
- How much money will I need to have set aside at retirement that I can then turn into an income stream for retirement?
- How much money do I need to save each month to get to that nest egg?
- What financial vehicles could I use to work on building that nest egg in a tax-efficient way?
- What tactics/investments fit my risk tolerance and time horizon to help me meet my retirement goals?
If you have access to a financial calculator you will be able to get a more precise number for your situation. You will see some charts in the following articles that might get you close to your number but using a financial calculator or an online calculator is going give you a more tailored number for your situation.
Ready to begin? If yes, please proceed to Step 1 – How much money will I need in retirement?
2107619 / DOFU 5-2018