Let’s Talk About What it Takes To Retire

When it comes to planning for your future, we all wish we had a crystal ball! Financial planning can be full of tough decisions, especially when no one truly knows what the future holds. 

However, with smart judgment, a trusted financial professional, and some goals for your life “after work,” you can get a realistic picture of what lies ahead. Let’s talk about what it takes to retire! 

When Can I Retire?

One of the first questions many people ask when thinking ahead to retirement, is simply: “When can I retire?” Many are hoping for a clear-cut age at which it is safe to stop a traditional full-time job and enjoy the fruits of a lifetime of labor.

In terms of the federal government, the age at which most people can begin to collect Social Security benefits is 62. However, even that number comes with a caveat. 

While most people can begin to collect Social Security benefits at 62, the amount you take at that time will be about 30 percent less than you’d receive if you waited until the full benefit age of 67. Benefits paid by Social Security will also vary depending on how much you earned while working, and for how many years you worked.

Your future also varies greatly from what it looks like for other families. What kind of retirement lifestyle do you desire? What do you want to do in retirement? How many years will you live after retirement? The answers to all of these questions impact the amount of money you need to have saved to live comfortably. With so many variables, financially planning for the future is as unique as you are.

What’s the Magic Number?

Much like wanting to know age, many also want to know just how much money you need to have saved in order to live comfortably after retiring from full-time work. While this again will largely depend on how you aim to spend your “Golden Years,” there are a few basic rules of thumb that can be helpful to understand.

One of those numbers in the financial planning world is lovingly referred to as “The Magic Number.” In the simplest of terms, there is no magic number universal to all people. Yet there are some general rules that financial professionals can use to provide a rough estimate.

For example, some basic rules of thumb you may consider:

• Save $1.9 million to retire comfortably

• Calculate an amount that allows you to remove 4% per year

• Start saving 15%of your salary in your 20s

• Ramp up savings based on age (save one time your salary at age 30, two times by 40, four times by 50, etc.)

• Calculate about 80% of your typical spending to budget retirement spending. 

While there is no magic number that allows for a “one size fits all” math equation, these guidelines should give you a direction. 

How Much Do I Need to Retire?

You’ve likely already guessed the answer to this question, and that’s because it rings true for most queries about what the future holds. 

The answer? It all depends.

I know that isn’t what you want to hear, but how much you need is a question dependent on many factors, such as the cost of living where you reside, if you own or rent your living space if you will have part-time work in retirement if you have pension accounts, and what you aim to do in retirement.

Even if you can answer most of those questions with some certainty, there are many you likely cannot. For example, how long someone will live greatly impacts how much funding is needed to do so. A general rule of thumb is to save for 30 years of life after work.

How To Make Sense of It All

At the end of the day, the best advice I can provide you when planning for your retirement is to work with a financial professional. My team and I are educated in the trends, formulas, and calculations that work across the industry, and can help you put your mind at ease about your retirement plans.

The best benefit, however, isn’t the years of experience or the technical know-how, but the ability to tailor a plan to fit your unique needs. That is precisely what we aim to do each and every day!

Working with us directly allows us to understand your future plans, where your savings account currently stands, and what you want to do in your years ahead. With those figures in mind, together we can work together and truly create that “Magic Number” for your individual needs.

Social Security claiming advice is not offered through, nor supervised by The Lincoln Investment Companies.