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Hi Taylor
- My spouse and I have been diligently reviewing our financial situation
and contemplating retirement, but we've encountered a stumbling block:
we're unsure of the total sum we need for our retirement. Is there
a way to determine our retirement savings target?
Hi Mark - We're all advised to prepare for retirement, yet
seldom does anyone explain precisely how much we should aim to save.
However, there are some methods to pinpoint your savings objectives.
Remember, your target figure will depend on a variety of factors,
so don't worry if your number is different from those of your peers.
First, establish a projected income for your post-work years. Much
like your current monthly income, you'll need a regular income when
you stop working. Anticipating future financial requirements can be
complex, as it does require some degree of foresight.
You can begin by reviewing your current spending habits and consider
how these expenses might change upon retirement. Do you expect to
travel more? Reduced the amount you are driving? Are you considering
relocating to a more affordable area? All of these variables will
affect your ultimate savings goal.
Alongside these considerations, you should also factor in wealth-related
aspects. If you're a high earner currently, you'll be aware that Social
Security may not replace a substantial portion of your income. The
specifics of your retirement account should also be examined, as this
will affect the taxation of your income.
While it's beneficial to perform your own calculations, many aim to
retire on around 80 percent of their current annual income. For example,
if you and your spouse currently earn a combined $100,000 per year,
you should strive to save enough to provide an annual income of $80,000
upon retirement. This figure should account for Social Security payments,
as well as savings from no longer paying income tax.
One challenging element of retirement planning is considering life
expectancy. It's a difficult topic, but it's integral to these calculations.
A healthy lifestyle could certainly contribute to a longer, happier
retirement, but nonetheless, longevity is a factor that must be factored
into your calculations.
After initial calculations, there are several retirement calculators
available that can help you determine how much to save each year up
to your 65th birthday. If you're thorough and honest with your calculations,
you can arrive at a relatively accurate estimate.
I commend your proactive approach to retirement planning, Mark. Continue
with this foresight and diligent planning, and both you and your spouse
will be in an advantageous position for a comfortable retirement. |
| Legal Disclaimer:
Information presented is for educational purposes only and is not
an offer or solicitation for the sale or purchase of any specific
securities, investments, or investment strategies. Investments involve
risk and, unless otherwise stated, are not guaranteed. Be sure to
first consult with a qualified financial adviser and/or tax professional
before implementing any strategy discussed herein. To submit a question
to be answered in this column, please send it via email to Question@GoFarWithKovar.com,
or via USPS to Taylor Kovar, 415 S 1st St, Suite 300, Lufkin, TX 75901.
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