subject: How Much Money Will I Need To Retire? [print this page] Considerations in Retirement Planning Considerations in Retirement Planning
Retirement shouldn't be something that you leave until the last minute - it should be something that you start planning as early as possible. Of course, that's not always possible. People begin preparing for retirement at all stages of life, and one of the most common questions asked is "How much money will I need for retirement?" If this sounds like you, here's what you need to know.
Not as Simple As It Seems
It would be nice if there were a simple, straightforward way to determine exactly how much you need to build in your nest egg to see you through your retirement years. Most people have heard the advice to save at least 10% of their income for retirement. However, it's really not as simple as that. First, understand that your income needs might not decrease during your retirement. The farther you are from retirement, the harder it's going to be to determine a somewhat accurate number.
You also need to understand that medical costs might be very high when you finally reach retirement age. You might expect Medicare to supplement your needs here and take care of some of your healthcare costs, but that's not something you can count on, especially considering the financial difficulties the program is experiencing. Wisdom would dictate hedging your bets and building a larger nest egg than planning to use a program that might not be around when you retire.
Don't Rely on Calculators Alone
If you're asking how much money will I need to retire, you might be tempted to use an online retirement calculator. These complimentary tools can offer some significant insights and give you a ballpark figure to work towards. That's about it though - a ballpark figure. You can't expect a piece of software to provide predictions for your retirement needs. Everyone's retirement needs vary based on a significant number of factors. For instance, you might not have any employer-provided healthcare coverage when you retire. You might have to help pay education costs for your children. You might want to travel extensively. Each of these factors has a profound effect on what you need to sock away in your retirement fund.
It Is Not a Case of "Need"
Ideally, retirement planning should not be a case of answering the question "How much money will I need to retire?" Instead, it should really be a question of how much you want. This is really the only way to effectively prepare for your retirement years and set goals to not only have enough in your nest egg to meet your financial obligations, but to have enough to spend on the activities and purchases that you want.
Work with a Professional
Going it alone in retirement planning may not always be a wise decision. Especially considering the potential for economic problems that can devastate your retirement funds, you need to work with a professional who specializes in retirement planning. He or she will be able to help you answer the question of how much money will I need to retire.
Securities and Investment Advisory Services may be offered through NFP Securities, Inc. (NFPSI), Member FINRA/SIPC. NFPSI is not affiliated with Universal Partners.
