HOW MUCH DO YOU NEED TO RETIRE

Many people approaching retirement aren’t sure whether they’ve saved enough to live comfortably. Investing and money management can feel intimidating and confusing, which often leads to anxiety and uncertainty.

One of the biggest reasons for this confusion is that people tend to focus too much on the size of their retirement nest egg. While the amount you save is important, the income your nest egg produces in retirement matters even more.

Another challenge is poor expense planning. If you’re good at budgeting during your working years, you’ll likely be good at managing expenses in retirement. If you’re not a strong budgeter yet, now is the time to start.

The good news: retirement planning is simpler than most people think. It really comes down to just three factors:

1. Your savings on day one of retirement – your nest egg.

2. Your expected annual investment returns – determined by your investment strategy.

3. Your monthly spending and expenses in retirement.

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We offer a free retirement planning service for our followers. With just ten minutes of data gathering, we can provide you with a personalized retirement forecast in about three minutes. Take advantage of this free offer to see exactly where you stand.

Your Nest Egg

If you’re still working, you’ll need to estimate what your retirement savings balance will be on the first day of retirement. A simple spreadsheet can do the job.

For example, if you’re 60 and plan to retire at 65, you only need five rows—one for each year. Start with your current savings balance, then add your annual contributions and any company match. Finally, estimate your annual investment returns to project how your money will grow.

Your Estimated Annual Investment Returns

Your investment returns are dictated by your strategy. We can review your portfolio and create a reasonably accurate forecast.

Your investment strategy is the single most important factor in determining your financial health in retirement. Most people fall into one of three categories:

1. Conservative Investor – Typically shifts into bonds, averaging about 5% per year. Unfortunately, this approach often struggles to keep up with inflation.

2. Follower – Relies on the standard “asset allocation” approach or Target Date funds, with average annual returns around 6.5%. While this strategy may offer slightly better returns than conservative investors, it also exposes retirees to significant losses during bear markets.

3. Aggressive Index Investor – Allocates most or all money to top stock index funds like the S&P 500, achieving about 9% annual returns over the long run. While this looks strong on paper, it’s risky for people over 60. A bear market just before or early in retirement can devastate your savings—a risk known as the sequence of returns problem.

   
   

Because these common strategies all fall short, I created my own unique investing system. Out of necessity, I developed a better way to invest for retirement—one that offers the potential for over 13% annual returns while also avoiding large losses in bear markets.

For investors over 60, avoiding a 40% loss in a market meltdown is critical. My system makes it possible to both protect your life savings and dramatically increase your retirement returns.

Your Expenses in Retirement

This is often the hardest piece to estimate, but it’s crucial. You need a clear picture of your monthly and annual spending.

Your expenses will dictate how much you must withdraw from your retirement accounts. Don’t rely on outdated methods like the old “4% Rule.” Instead, build a realistic spending plan tailored to your lifestyle and needs.

Other important factors include how and when to sell investments in retirement, as well as how to manage cash. We cover these details in our free retirement planning session.

The Bottom Line

By focusing on three core areas—your nest egg, your investment strategy, and your expenses—you can gain clarity about your retirement future. Most people don’t do a detailed analysis, leaving them uncertain about whether they’re truly prepared.

But with the right planning, you can know exactly where you stand—and take control of your financial future.

I would like to offer you a FREE retirement planning session where I can review your current situation and show you where you stand.  These sessions are quick and painless, and people get a lot out of them.  There are no obligations or commitments on your part.

Click here to schedule your free session today.  You should know where you stand with your retirement finances. 

Stay Disciplined My Friends,

Phil

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