How much do I need to retire?
We see this discussion all the time in financial articles and investment company advertisements and if you look at the average balance of 401k savers ($89,300.00) most of the conclusions can be scary. A recent article suggested you needed one million dollars in today’s dollars. There is a current television commercial with the same message. Clearly not everyone will have that balance, even if they save more now, for a lot of reasons: started saving too late, to little, poor returns, no savings, had to raid their account…. A whole bunch of reasons.
The first step is to start saving toward the amount you need to retire, and stick with it. Obviously the sooner (younger) the better but get started, saving as much as you can afford. The second part; choosing your investments and managing your risks seems to be where most of the energy is spent. This is a big responsibility and it is all yours! There are all kinds of help from information and tools (such as www.401k-Checkup.com) to professional advisors. In the end each of us has to decide for ourselves what to do…and we do!
Back to the million dollars: on the one hand this can be a true objective. Assuming you live a long life it is reasonable to see this as your goal for the amount you need to retire. But don’t get freaked out by the number, or how far away you are now. Time is your biggest ally, and saving. If you got a late start or can’t save at the rate you need to get to a million dollars think of what you might do to make adjustments to your life. Remember we also control how we spend the money we make! If we spend less we can save more. Also if we learn to live on less and still be happy, our savings will last us longer, and we may need less in our savings.
In the end we all make adjustments to find a way if our life. We believe people are pretty resilient and you will find a way. That doesn’t mean you can put off saving or stop cause your behind schedule, it means you just need to find your process and stay committed. Maybe you will get to one million dollars, but if you don’t you will have found a solution for yourself.
It’s a tool, not a rule!