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5 Questions to Understand Your Retirement Needs

5 Questions to Understand Your Retirement Needs Fitzwilliams Financial

Feeling uncertain of how much money you’ll require when you retire? It’s a typical worry among Americans nearing retirement. This blog provides some advice on ways to start gauging your financial demands, as well as some suggestions on how to bolster the duration of your savings and find success in retirement.

  1. How Much Should I Spend?

One of the easiest ways to judge how much money you will need in retirement is to take stock of how much money you need right now.[1] Track your expenses and see how much money you spend on different aspects of your life. If you track your expenses for at least a few months, you should be able to get a sense of how much money you spend on average. Understanding your budget is the first step to understanding how you can replace your paycheck in retirement.

But also understand that your expenses and spending patterns can and may change in retirement. If you have a mortgage that you plan on paying off before you retire, then you don’t have to factor that into your retirement expenses.[2] The same goes for outstanding car payments or loans you plan on paying off before retirement.

  1. How Much Income Will I Have?

Now that you have a sense of how much you’ll need to cover your living costs in retirement, you can determine what your savings should be invested in to generate enough income to cover those costs. Add up all of your income from rental properties, expected Social Security, pensions, and other investments, and compare that estimate to your monthly costs. If your costs outweigh your income, you may need to think about exploring other investment options, adjusting your lifestyle, or rethinking your retirement timeline.[3]

  1. How Many Years of Retirement Should I Have Saved For?

On average, men who retire at 60 years old can live another 22 years. On average, women who retire at 60 can live another 25 years.[4] And while those numbers are estimates, they can at least give you a sense of approximately how long you should be considering saving for.

  1. How Can I Maximize the Longevity of My Savings?

Working longer is probably the best way to make sure your retirement money lasts as long as possible. Every year that you aren’t cutting into your savings is another year that you are bolstering your funds. You’ll be able to add to your retirement rather than withdraw from it. Additionally, every year that you delay claiming Social Security between the ages of 66 and 70 increases your Social Security benefit by 8%. [6]

  1. I Prepare for Long-Term Care?

Even though you may not need long-term health care, such as a nursing home right now, it can be a major retirement expense in the future.[5] There are insurance options for long-term care that you should consider. If you do decide to get a plan, the cost of that plan will also have to be factored into your expenses in retirement.

Understanding the components of a comprehensive retirement plan is only the first step in executing it. It takes doing the work and knowing the strategies available to you to properly implement a strategy that will work for you. Contact us today for a complimentary review of your finances to take that next step in executing a successful retirement strategy.

When consumer confidence hits a multi-decade low, it is completely natural for you to feel a sense of hesitation about your hard-earned savings. If you are approaching retirement, seeing prices rise while trying to figure out the right time to adjust your portfolio can feel incredibly stressful. However, this low confidence might actually be introducing a healthy dose of critical thinking into the market right now. Instead of rushing into investments out of a fear of missing out, I am seeing people take their time to analyze their moves before they act.

This deliberate pace could be a vital asset as we prepare for what might be a historic three trillion dollar wave of tech IPOs. The names hitting the market are incredibly popular, and the media hype may make you feel like you need to change your entire strategy to get a piece of the action. But we must look closely at the underlying reality: many of these massive firms are not yet profitable. The typical corporate fundamentals simply are not there yet.

Because of this, I believe you should treat these speculative assets with extreme caution, much like money you would take to Vegas. If you want to participate, you might consider limiting that exposure to no more than five percent of a well-diversified portfolio. You should never dismantle a carefully crafted, long-term retirement plan just to follow a market trend. Furthermore, you must realize that extreme trading volumes during these public launches could cause your orders to execute at vastly different prices than you originally intended. It pays to be patient and let the dust settle.

If you have questions about how these shifting market dynamics might apply to your personal retirement plan, our team is always here to help.

Key Takeaways

  • A drop in consumer confidence may encourage a healthier investment environment by forcing individuals to rely on critical thinking instead of emotion.
  • An upcoming wave of massive technology IPOs might generate significant media hype, but these companies may lack current profitability and traditional business fundamentals.
  • Investors should avoid allocating more than five percent of a diversified portfolio to highly speculative, unproven market assets.
  • Heavy trading volume during a major public offering could cause investment orders to execute differently than an investor expects.

Fitzwilliams Wealth Management, Inc. is an SEC registered investment adviser. FWM and Fitzwilliams Financial are affiliated companies. This content is for informational purposes only and should not be construed as personalized investment advice. We do not provide tax or legal advice. Investing involves risk. Media appearances are for informational purposes only and do not constitute an endorsement.
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