For some people retirement is all about the numbers; the age you plan to retire, how much money you need, and so forth. But is retirement really about numbers?
Numbers give us a baseline to help you financially plan for today and the future. Your numbers can change throughout your life. Maybe you’re already retired or are within ten to twenty years of retiring, but one thing is clear; whether you love them or hate them, numbers play a role in all aspects of your financial life:
Economic Conditions
It’s a sad fact that most Americans have less than $1,000 in savings, let alone anything for retirement. A recent survey suggests less than half of Americans are saving enough to retire in a stable way. In fact, most people underestimate just how much they’ll need and how long they’ll need it.
Sometimes retiring comes earlier due to workforce changes such as layoffs and early retirement plans. Obviously, if you do not save enough to support yourself, then retiring will be delayed. Moreover, living costs when you retire can be higher than expected due to cost of living increases and unexpected medical bills. If you decide your only means of income will be savings and government programs like social security payments, the only way to properly plan is by meeting with an experienced financial advisor to assess your needs.
You should decide well in advance if you plan to retire as soon as you can or if you plan to wait so you have more time to save and secure larger SS payments. All of that comes down to how you feel about your current working condition. If it’s something you enjoy and feel physically capable of doing, then extending your work life may positively affect your retirement. On the other hand, if you’re really miserable, then you might be more interested in a faster timeline and may even consider a part-time job doing something that makes you happy.
Perhaps the best way to put numbers into context is to say that the math of retiring is there to help you fully understand your options, but only you can make the final call. Part of the job of a qualified financial advisor is not just to do math with you, but also ensure that you understand what it means, that you have all the information you need to be fully informed. Without a steady primary income, people who have retired are vulnerable to sudden events that cost a lot of money.
Health Conditions
Eye doctors, dentists, and other specialists can have big bills. Without employer-provided health insurance, then the cost of getting a significant procedure can be devastating.
When you know your ideal retirement number, you can decide how much of a cushion you want to protect yourself from these sudden negative events. The more you want to have stored up, the more you need to put aside now. That can threaten your current standard of living, but it is a tradeoff between now and the future.
The original Social Security Act of 1935 set the retirement age of 65. Currently, the full benefit age is 66 years and 2 months for people born in 1955, and it will gradually rise to 67 for those born in 1960 or later. Yet, the ultimate age to retire is really up to you and depends on your financial goals and needs in later years.
If you would like to retire but have concerns about how long your money will last, consider a portfolio review with an experienced financial planner. Even if retiring is still decades away, there are a lot of things to do now to ensure your dream scenario tomorrow.
