How much money do you need to retire? That’s about as personal a
question as, “What do you look for in a spouse?” or “What is your dream job?”
The answer is different for everyone.
So are questions about when you want to retire, how you want to
retire (suddenly or gradually) and where you want to retire. There are vast
combinations of these and many other variables that serve to make the style and
level of retirement different for every individual -- even within the same
household.
Americans are retiring at a rate of 10,000 per day, which means a
lot of people need retirement planning advice.1 Financial services firms
like ours develop relationships with neighbors and friends in our local
community to offer personalized guidance and advice on financial matters. If
you’re pondering how much money you may need to retire, please come and see us.
Not only can we help you with that assessment, we create financial strategies
through the use of insurance and investment products to help you work toward
your retirement goals.
Fidelity recently conducted a survey that yielded wildly divergent
responses in terms of how much money people think they need to retire. For
example, 25 percent think they will need to have saved two to three times their
annual salary during their last year of full-time work, while many financial
advisors say it’s more like 10 years’ worth of salary saved. Overall, 74
percent of Americans underestimate how much they will need for a comfortable
retirement.2
It’s important to keep in mind that issues may arise even if
you’ve saved an appropriate amount for your household by the time you retire. Some
circumstances -- such as the unexpected death of one spouse before the other --
could expose the need to replace a lost source of income. This is a possible circumstance
where buying a life insurance policy, even long after your children have grown
up and are on their own, may still be a part of your overall financial strategy,
depending on your personal circumstances. At a minimum, one of the two Social
Security benefits the couple was receiving will stop when one spouse dies. A
life insurance payout can help augment any lost Social Security or pension
benefits to help a surviving spouse maintain his or her current standard of
living throughout retirement.3
While some retirement factors are personal, others may be cultural
in nature. The most current available data shows that in the U.S., the average white
family has more than $130,000 in retirement savings while the average African
American household has only $19,000. Over time, disparities in income and
personal wealth have an even more dramatic impact: By the time they enter their
60s, whites have accumulated 11 times more in savings than African Americans --
on average at least $1 million more in wealth.4
Unequal pay and career opportunities also may impact a woman’s
ability to save enough for retirement. To complicate matters further, women
tend to live longer. A couple estimating how much they need to retire may make
the assumption that they’ll need, for example, 25 years of retirement income. The
husband might pass away after 15 years while the wife lives another 15 years on
her own. However, their income plan may not reflect a loss of income sources
once the husband dies nor increased expenses the surviving wife may incur in
her later years of life.5
If you’re interested in estimating about how much money you may need
to save each year, try out an online retirement calculator, like this one provided by the
U.S. Financial Industry Regulatory Authority (FINRA).6 You also can contact
us to schedule a more in-depth retirement analysis.
Content prepared by Kara Stefan Communications
1 Insured Retirement Institute. 2016. “Boomer
Expectations for Retirement 2016.” https://www.myirionline.org/docs/default-source/research/boomer-expectations-for-retirement-2016.pdf.
Accessed April 28, 2017.
2 Lee Barney. Plan Sponsor. March 6, 2017. “Most
People Think They Will Need a Paltry Amount for Retirement.” http://www.plansponsor.com/Most-People-Think-They-Will-Need-a-Paltry-Amount-for-Retirement/?fullstory=true.
Accessed April 28, 2017.
3 Jamie Hopkins. Forbes. April 27, 2017. “Why
Life Insurance Is Essential for Retirement Planning.” https://www.forbes.com/sites/jamiehopkins/2017/04/27/why-life-insurance-is-essential-for-retirement-planning/#78b4ee9f31cd.
Accessed April 28, 2017.
4 Rodney Brooks. Chicago Defender. April 28, 2017.
“The African American Retirement Planning Gap.” https://chicagodefender.com/2017/04/28/the-retirement-crisis-facing-african-americans/.
Accessed April 28, 2017.
5 LeAnn Bjerken. Spokane Journal of Business.
April 27, 2017. “Women face unique challenges in retirement planning.” https://www.spokanejournal.com/local-news/women-face-unique-challenges-in-retirement-planning/.
Accessed April 28, 2017.
6 FINRA. 2017. “Retirement Calculator.” http://apps.finra.org/calcs/1/retirement.
Accessed April 28, 2017.
Life insurance policies are contracts
between your client and an insurance company. Life insurance product guarantees
rely on the financial strength and claims-paying ability of the issuing
insurer.
Financial calculators are designed as
informational tools to help you estimate answers to common financial questions.
They are not intended to predict future returns or results, nor do they
represent the performance of any specific investment or product.
This
material is intended to provide general information to help you understand
basic financial planning strategies and should not be construed as financial
advice. All investments are subject to risk including the potential loss of
principal. No investment strategy can guarantee a profit or protect against loss
in periods of declining values.
The
information contained in this material is believed to be reliable, but accuracy
and completeness cannot be guaranteed; it is not intended to be used as the
sole basis for financial decisions. If you are unable to access any of the news
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