Do you have trouble envisioning your retirement? Are you realistic about both your current budget and future retirement expenses? Do you know where to start when it comes to saving for retirement? These are all classic stumbling blocks that can impede your retirement success.
The good news is that you can change your approach to retirement. We answer five common questions about saving for retirement, and the benefits of working with a financial advisor to achieve your retirement objectives.
How Much Do I Need To Retire?
Whenever we get asked this question (which is often!), we always respond with, “It depends…” The reality is that everyone’s lifestyle is different. One person might be able to live on $5,000 per month, whereas someone else may need $20,000 a month. Thus the amount you need to save for retirement can vary significantly from one person to the next.
How Do I Get Started Saving for Retirement?
SageVest Wealth Management always begins by evaluating your lifestyle today; specifically, how much you’re spending.
The reality is that if you ask someone how much they spend, they usually underestimate the amount. Very few people track all their spending and know their ‘real number.’ Furthermore, most people focus on recurring monthly expenses, which typically account for only a portion of their real budget.
We therefore advocate a much easier but still fairly accurate approach to determining your current spending:
* Your total income for the year includes not only earnings, but also bonuses, tax refunds, gifts, etc.
Using this calculation, if your income didn’t go to savings or taxes, you spent it.
Why Am I Not Saving as Much as I Had Planned?
Life tends to be more expensive than we plan for, and virtually everyone faces unexpected costs at some point throughout the year. However, not everyone learns to budget with foresight.
We monitor actual, not projected, spending on a recurring basis, helping to establish baselines and recognize trends that give you a better sense of your true financial needs and how they relate to your financial preparedness.
If large expenses keep derailing your savings for retirement, we can help you identify ways to steer your retirement back on track.
Conversely, if you’re ahead of the game, it might mean greater opportunity for you and your family, or the ability to retire early.
How Frequently Do I Need To Update My Financial Plan?
In our eyes, financial planning is an ongoing initiative that must evolve with inevitable updates in your life. That’s why your retirement planning should ideally extend over several decades and be revisited frequently to reflect:
- Your current lifestyle
- Decisions you’re contemplating
- Potential future life events
SageVest Wealth Management always analyzes a number of ‘what-if’ scenarios in our financial planning exercises with you. These can help evaluate considerations like:
- What if my spending is higher or lower?
- What if I retire early or work for longer?
- What if I want to travel more in retirement?
- What if I downsize my house or relocate?
- What if I need to pay for a wedding?
- What if I have long term care needs or other medical expenses?
Looking at a variety of scenarios helps you gain a sense of what impacts your savings targets for retirement, and what doesn’t. In turn, this knowledge equips you to make informed decisions, day-by-day and year-by-year.
How Do I Save for Retirement While Enjoying Today?
Just like most things in life, financial decisions involve balancing your options and prioritizing objectives. This allows you to focus on what’s important today and also what’s important tomorrow.
Once you’ve identified your savings targets, the most common prudent step is to automate your retirement savings. Setting up recurring contributions to your retirement plan and/or investment account helps to ensure you follow-through.
SageVest Wealth Management offers comprehensive wealth management services. These include, but are not limited to, retirement planning. Our proactive services help you to keep your finances on track and make wise decisions along the way. Please contact us to learn more about how to plan for and achieve your goals.
