I recently had a client tell me that he finally “got it.” I asked what he meant, and he said that he had looked at a lot of retirement calculators online and wondered why our projections for distributions differed from online calculators he had tried where he plugged in a couple of numbers and it quickly spewed out the amount of income he’d receive at retirement. What he realized was that our calculations weren’t assuming he’d run out of money at some point in the future, but rather allowed some room in the calculations for some unexpected life challenges along the way.
The answer to, “How much is enough?” is often, “Well, it depends.” Not very satisfying in the short run, but accurate, nonetheless. You see, when you want to know how much it takes to retire, quite a few variables are involved. At what age do you want to retire? How much do you want, or need, to spend? How long do you plan to live? Do you want to leave funds to heirs or charity or do you want to have nothing left when you leave this world? How are you going to invest your money? How much can you save? What do you anticipate will be the effect of inflation on your investments? You get the idea.
Don’t despair, even with all of those questions and many others to consider, you can get answers regarding the amount of money you will need, the amount of income you can expect, as well as answers to any number of other questions you have about retirement or other financial planning subjects.
It’s not simply a matter of plugging in a couple of numbers and getting an instant result. It’s a process. And when implemented with an advisor who knows you well and reviews your objectives with you regularly, that process will bring you confidence that you will have enough. You will know what you can comfortably spend and you can see the effects of all of those “what if” scenarios on your future.
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