Many folks who seek our services have one main question: Can I retire confidently?
When we work with people who have “just” the retirement goal and an uncomplicated financial life, the answers to 10 simple questions help us get started.
With this information, our team analyzes your situation, asks any necessary follow-up questions, and then goes over our recommended strategies with you.
Here are the 10 questions. You can probably answer most of them today.
- How old are you?
- What is your desired retirement age?
- What will your Social Security be at your desired retirement age? (Find your number here.)
- How much do you have invested for retirement?
- How are your investments allocated (stocks/bonds/other)?
- How much are you saving each paycheck (with employer match)?
- How much do you want to spend each month in retirement (after tax, in today’s dollars)?
- How much other income will you have in retirement (pension, royalties, rentals, deferred comp)?
- What is your salary?
- What debts do you have?
Example "Am I on track?" scenario
Let’s run through a quick scenario and possible recommendations for a 48-year-old empty nester we’ll call Nicole.
Here are Nicole’s answers:
- Age: 48
- Desired retirement age: 65
- Social Security at 65: $2,900 a month
- Amount currently invested: $175,000
- Investment allocation: 85 percent large U.S. stocks, 15 fixed income
- Retirement savings per paycheck: 10 percent plus 5 percent match ($548)
- Monthly spending in retirement: $6,000
- Other income in retirement: $200 monthly pension from old government job
- Salary: $95,000
- Debts: Mortgage with 20 years and $200,000 left
We assume a 4.5% annual investment return above inflation, with inflation at 2.5%. We plan for Nicole to live to age 100.
Our modeling shows that–if nothing changes–Nicole's resources fall short of providing the income she needs. This is because even modest inflation chews up her spending power over a lengthy retirement. Her $72,000 per year after-tax budget–or $6,000 a month–jumps to more than $109,000 after taxes by the time she turns 65. And it goes up from there.
It’s important to note that there’s usually at least one meaningful lever someone in their 40s or 50s can pull that will make a big difference.
Many first-pass plans fall short. In other words, most people need to make adjustments. At Nicole’s age, she has several choices, including saving more as her income grows. We agree on this strategy, since she thinks her income will rise with performance increases and promotions, and she doesn’t plan to increase her lifestyle with those pay bumps.
An alternative might be to plan to spend less when she retires. That could work as well, if necessary, but for now, we encourage her to aim higher.
This is not comprehensive planning, but rather a simple “Am I on track?” retirement analysis.
We share this to encourage you to review your situation–the sooner, the better. It isn’t too difficult to figure out where you are, and it usually doesn’t take too long.
Just answer the 10 questions.
If you’d like our guidance during the process, schedule a call with our team here.
*This is a hypothetical example and is not representative of any specific investment. Your results may vary.