- December 11, 2020
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Let’s face it, retirement planning is not necessarily on the top of everyone’s To-Do list these days. The hard fact is, though, the longer you wait to start planning for retirement, the harder it will be to set aside a big enough nest egg to keep you comfortable during your golden years. But what is big enough?
Some retirement experts suggest that you need roughly 80% - 90% of your pre-retirement income – that is if you are retiring without debt. With debt, they say you’ll need 100% of your pre-retirement income. Others say you need a lot more than that – around 12x more than your pre-retirement income. But there are so many variables that go into this calculation that there is no one dollar amount that works for everyone. The amount you need for your particular situation may differ widely from what someone else’s.
So how do you know what you need? AVP, Pensions and RF Retirement Specialist, Cleora Farquharson says to start by thinking about your retirement lifestyle. “What do you want your golden years to look like? We’re talking about some specifics, like will you make a big purchase like a new home, open a business or travel? These things are important in coming up with a dollar amount that you need to accomplish these goals”.
Cleora further advises that once you have an idea of what you want your retirement to look like, consider your retirement income and expenses. Do you plan to take on a part-time job in retirement? Do you have investments or real estate that will generate income? Document all that your expected retirement income. The next step is to then determine what your expenses will look like. Cleora warns against underestimating this is your retirement plan. “This is where you plan for your everyday realities,” she said. “You should be thinking about things like health insurance and how that will be covered, especially if your employer had been contributing to this all along. Your out of pocket costs will likely increase and this is an extra expense you will need to account for”.
Creating a clear picture of your ideal retirement, taking into account your income and expenses, is a great start towards in a strategic retirement plan. But it does take some effort. If this all seems daunting or overwhelming for you, our RF Retirement Guide can help you. In it, you’ll find helpful resources, tips and tools to help you come up with a plan that suits your individual needs.
For tips on funding your retirement, check out this helpful video featuring our RF Retirement & Investment Specialists. Click here to go to videos.