Do You Have Enough to Retire?

Saving for retirement is a life journey and should not be viewed as an end goal. As such, consideration should be given to what one must do to have a successful retirement, which is dependent on many factors. These include-but are not limited to--longevity, inflation, health care, unexpected expenses, and market volatility. What’s more, there is not a specific age or dollar amount of assets that one must achieve to retire. Rather, knowing when to retire should incorporate both a measure of financial assets and an assessment of what one will do in the retirement years.

How Much Money Will You Need in Retirement?

The value of your financial assets and the Social Security benefits you may be entitled to at retirement are unique to you and only you. In addition, your needs and priorities in retirement will differ from other retirees. Accordingly, before you retire, you should estimate your retirement expenses (aka retirement spend) along with your replacement income sources in retirement (i.e. Social Security). The difference between your retirement spend and your retirement income will yield your yearly withdrawal amount from your assets portfolio. By factoring in the estimated length of years of your retirement, you can then determine the amount of financial assets you will need to retire comfortably at various ages, and to avoid the risk you will run out of money while still living.

Do You Have a Roadmap for Your Retirement?

Transitioning to retirement can be stressful. Having enough money in the bank isn’t enough to ensure you will have a healthy retirement. In fact, attempts to navigate changes once you retire could prove difficult if you do not have a plan in place-a roadmap to lead you. Therefore, contingency planning will serve you well to provide the turn by turn directions and monitoring practices needed for you to enjoy a robust retirement. Changes in personal circumstances (death of a spouse), changes in financial markets (high inflation), and changes in economic indicators and geopolitical events (tax laws and foreign invasions), can impact how you fair in the retirement years. But, equipping yourself with tracking tools and contingency plans will give you the confidence you need to succeed.

What Will You Do With Your Time in Retirement?

A key component of personal identity is employment. Accordingly, it may be beneficial to delay retirement or continue participation in paid or volunteer work to reduce the risk of cognitive decline, which can be triggered by social isolation. While there is no way to imitate your working life in retirement, there are many opportunities for mentally stimulating activities. Examples of such activities include connecting socially, playing a musical instrument, woodworking, writing, and cooking. Finding value and meaning in how you spend your time in retirement is equally important to not running out of money.

When you know how much you need to save for retirement, when you have a contingency plan in place to direct you, and when you know what you will do with your time, you will know you are ready for retirement.