Most people I talk to hope to retire some day. Almost everyone of them gives me an age at which they would like to retire at, but rarely tell me how much they will need in retirement dollars when they retire.
Your ability to retire should not be based on age but on the amount that YOU will need in order to maintain your standard of living without working.
This calculation can be cumbersome and complicated to figure out if you don’t know the factors that should be considered.
First and foremost, you need to determine your payoff date for all your unsecured debt. Many people continue to add on and service their debt until death. This is a very unhealthy way to live and will not privilege you with a dignified retirement.
The key to planning for retirement lies in the necessity to be debt free before that time begins. Once you are debt free and you own your home, then the calculation becomes very easy.
Here is a real life example. If you and your spouse make $60,000 a year and service a $500 a month debt payment, a $650 mortgage payment and a $250 car payment, then your actual retirement monthly requirement will be only $2350.
Here is the calculation: If you and your spouse are making $60,000 a year, your estimated take home per month is 75% of that divided by 12 (months) which is $3750. Then you want to subtract all your debt payments from that amount since you need to be debt free to retire. The $3750 minus the $500 monthly debt payment, the $650 mortgage payment and the $250 car payment will give you a monthly requirement of $2350.
The $2350 requirement over 12 months will equal an annual requirement of $28,200. In order to secure this amount, your retirement investments will need to produce that much in interest every year. If you conservatively get 5% a year return, then your retirement dollars need to be $564,000 in order to maintain your standard of living.
Keep in mind, that many retirees will receive some type of Social Security Benefit, but conservatively, the number above represents a true number.
Every family is different, so contact me to find out what your retirement dollar amount needs to be, so you too can retire with dignity. [email protected]
Imagine taking a 10 day cruise to the Caribbean on a luxury liner without any radar, communication devices, GPS systems or human Navigators on board. Do you really think you will reach your vacation destination safely and on time? Having this knowledge beforehand would be an essential ingredient when deciding to take that cruise or not. Even if the ship had all the electronic devices on board, I would still hesitate taking the cruise without a human navigator present.
A navigator is the person on board a ship responsible for its navigation. The navigator’s primary responsibility is to be aware of the ships position at all times. Responsibilities include planning the journey, advising the ship’s captain or commander of estimated timing to destinations while en route, and ensuring hazards are avoided. The navigator is in charge of maintaining the aircraft or ship’s nautical charts, nautical publications and navigational equipment, and generally has responsibility for meteorological equipment and communications.
Having a Navigator for your Financial Journey is just as essential. Without the proper guidance, tools and systems in place, your financial journey could become choppy, misguided, interrupted, lost or even sunk.
Most people do not understand the rules of engagement for a secure and stable financial life. Without understanding the proper systematic process or the implementation of sound financial principles, most people will struggle living paycheck-to-paycheck every day of their lives. They will wake up in their retirement years and regret that they didn’t do more to bring financial security to their lives.
All it takes my friends is the correct knowledge, commitment, and the will to say enough-is-enough. You do not need to wake up one day with regret and you do not need to continue to live with the constant worry that financial crisis is just one missed paycheck away.
Stand up today so you can be free tomorrow. We have a team of Navigators standing by to help you achieve financial freedom.
Last week I mentioned to our adult children ages 21, 20 and 19 that if they invested just $50 a week until age 65 they would be millionaires. What surprised me was their response. “Why would we want to sacrifice our fun now by planning for an event 45 years from now?”
Granted, at their ages, $50 a week or $200 a month is a stretch, so I partially understand this mindset. But, if someone told me back in 1980 this same statement, I would have taken action. Although, my investment strategy has been successful, I didn’t know what the future would hold for me back then and to have the knowledge that I have now would have catapulted me toward financial independence much sooner.
So my question is, how do we as parents model for our children the urgency to start early and stay committed over time? I’m not sure how to handle this with my own children and step-children. How do you motivate this generation to change the direction of their lives by sacrificing some today so they can live free later? I’d love to hear your response. Comments are welcomed!
Everyone I know would prefer to be free than enslaved. But when it comes to our finances, we fall short of ever reaching that freedom. It’s sad that only 4% of Americans will ever find that freedom at retirement age. (See my Blog https://waypointsfinancialservices.com/are-you-an-average-american/)
Why is America so complacent with their finances? There isn’t a single family I know that has not or is not experiencing some type of financial crisis or storm, but most of these families will not attack their situation with vengeance. Why is this? Why do people live for today and not plan their tomorrow? Why would anyone want to remain enslaved in their financial situation? Is it because people just don’t want to take the time to develop a plan? Is it that they are afraid of what their actual numbers look like? Do they feel that a plan is too restrictive to their lifestyle? Or is it that they just don’t care and would rather deal with their situation some time later…which will actually turn into never.
Why are we so afraid of commitment? Why are we so inclined to live it up today even if it means borrowing on credit for your life desires? Doesn’t anyone understand that there is power and freedom with a plan? I choose freedom…that means I live by a plan, never borrow money, live within my means, invest 15% of my income for my future and monitor every penny that I spend. I will live my retirement years in Freedom….will you?
Today is graduation for our local school district. Four years of growing, learning, developing, planning and hard work will be recognized tonight at the formal ceremony. Thousands of other young adults across the nation will be recognized for their accomplishments over the next few weeks.
Many of these young adults will move on to college, trade school, military service, family business or other jobs. Many will buy their first home, finance a new car, travel around the world and begin to live on their own, void of the hands-on supervision that they are so accustomed to.
Many will begin to accumulate debt, fall into credit card crisis, become overwhelmed with financial stress and quickly become financially unhealthy.
But a few will recognize the value of adopting a plan and will take the steps necessary to prepare for the long road ahead. For those of you who wish to adopt a plan, I have some great advice. All it takes is commitment and the will to make it happen.
There will be many excuses for not having a plan, but I promise you that with compound interest as your friend, even $10 a week will grow to a sizable nest egg.
Anyone can afford $10 a week. Your weekly Starbucks purchase alone is costing you $30. So, if you invested $10 a week from the time you graduate high school and let it grow in a mutual fund at 8% (very conservative), by the time you reach retirement age (69.5), your investment will have grown to $344,683.
The average retirement savings for a 69 year old right now is only $45,000. You can make a difference by starting now. Avoid the debt trap, let compound interest be your friend and stay diligent with your plan.
Here’s to a successful future. Congratulations Seniors!
Working in the Financial Services profession, I am always looking for better ways of doing things, better systems, more comprehensive services and better products.
One thing I pride myself on is the fact that I thoroughly research before I decide to act on adopting a new service or product.
A very unfortunate event took place last week. After months of research, I decided that a certain company who offers Fiduciary services was a much better fit for my retirement portfolio than the Advisor I had been using for the past 7 years. So, I decided to move the portfolio over to the new company for them to manage it for me.
When my broker became aware of my intentions, he called me in a state of fury. In the end he berated me with questions, called me foolish and said that I had no idea what I was talking about.
The conversation left me in an emotional tailspin. I felt belittled for making a choice for my OWN portfolio. What right did he have to disrespect my decision for my money.
In the end, I must ask; “how well do you know your advisor?” Are they working for you or are they just in it for their own commission? Be careful who you trust and be careful not to associate with any professional who does not have YOUR best interest at heart.