Retirement is a big deal. Finally, you can stop living at work and start working at living. Though our working lives can seem long, retirement still sneaks up on a lot of us; often leading to stress when contemplating how much you need to retire and where those funds will come from.
So, how much do you need to retire? For some, this question is a haunting word problem – “if X equals your spending money in retirement, Y equals your rate of return, and Z equals the number of years you will live, how much will you need to save given that X, Y, and Z are unknowable?” To solve this retirement equation, you should start by considering the following:
- How much will you spend?
- The answer to this question will help determine the amount of income replacement you need to target in retirement. Consider rising inflation, along with your regular bills, home maintenance costs, the increase in car insurance, taxes, as well as hidden expenses like travel, medical costs, and long-term care.
- How long will you live post-retirement?
- Since no one knows the answer to this question, it is best to consider averages. According to the Social Security Administration, at 65, the average male can expect to live 18 more years and the average female can expect to live 20.5 years. However, it is recommended to over-estimate your life expectancy. Unless you are in frail health, it is best to plan to live 25-years after retirement, or to age 90, especially if you are married.
For many, Social Security is a vital piece of the puzzle when deciding how much you need to retire. However, looking at the math, Social Security only replaces about 40% of a median wage earner’s net income in retirement. For many, this can leave a significant shortfall in retirement income. At TriscendNP, we help individuals and organizations bridge this shortfall with other income sources, including:
- personal savings
- real estate
- employer sponsored retirement plans
How TriscendNP Can Help You Rest Easy
Ultimately, you need to be thinking about retirement no matter where you are in your career. After all, retirement is the biggest expense of your life and there are certain risks that must be evaluated. With the help of TriscendNP, you can solve many of the unknowable variables and rest easy knowing that your future and family are protected.