How Much Do I Need to Retire

Retirement is the pinnacle of life. It’s the time when you are finally free of the burden of work and can enjoy the finer things the world has to offer us. Whether your ideal retirement includes lavish global travels, daily rounds on the golf course, or quality time with the grandkids, you need to be financially self-sufficient.


According to the Center for Retirement Research, more than 50% of Americans are vulnerable to not having enough money in retirement to sustain their standard of living. The earlier you put together a sound financial strategy and start accumulating your savings, the better.


Various calculations can be performed to approximate how much money one will require to retire comfortably. Of course, the amount depends on your desired lifestyle, living cost, and numerous other factors. Let’s take a deeper look at some retirement planning methods to understand better how much you really need in the bank to kick back and relax in your golden years.



How Much Is Enough to Retire

It is challenging to determine how much money you will require when you are uncertain how many years you will live. Your mortality might be a difficult concept to process, but you don’t want to exhaust your retirement savings too early. Many people will plan for an average of 20 years of retirement, assuming they retire at 65 and live to 85 years old. The ultimate strategy is to accumulate enough wealth to fund a comfortable retirement for as many years as possible.


We recommend our clients save as much money as is feasible in a tax-efficient manner so that their assets have the potential to compound over time. Combined with a sound financial strategy and best-in-class investment portfolio, you will be able to build your wealth for the future effectively.



How Much Money Needed to Retire

Many philosophies exist regarding how much retirement savings you will require; these are some of the most popular approaches.


The Million Dollar Method

Many experts state that you should comfortably retire with $1 to $1.5 million. This is difficult to validate as everyone’s needs are highly personal and dependent on lifestyle, spending habits, and where you plan to reside.


10-Year Income Method

This strategy involves using your pre-retirement income to determine your savings goal. Experts supporting this method suggest saving 10-12 times your current annual income for retirement. If you earn $200,000 per year, you should have a $2 million nest egg prepared for retirement.


The 80% Income Method

This planning method suggests you need approximately 80% of your yearly income to satisfy your retirement expenses. For example, if your average annual salary were $200,000, you would need to have $160,000 available each year to finance your retirement.



How Much Does a Couple Need to Retire

Married couples will have an increased need for retirement income, but that doesn’t mean that the planning process is twice as difficult. As with individuals, the amount you will require is dependent on your preferred retirement lifestyle and personal needs.


On average, couples will need approximately 70% to 90% of their pre-retirement income to sustain their standard of living through retirement. An added benefit of being a couple is that even though you must plan for the expenses of two people, you can take advantage of dual incomes and savings.



In summary, the amount you will need for retirement is not exact and highly dependent on various factors. The key is developing a comprehensive financial strategy as early as possible to put you on the path to your ideal retirement. Creative Financial Group specializes in delivering customized financial planning services to friends and neighbors in the Indianapolis area. Connect with us today to find out how we can simplify your retirement planning.

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