Retirement planning is not one size fits all. Everyone’s financial situation and goals are different.
While there is no one magic number to answer this question for everyone, it is important to get a clear sense of where you stand and an idea of what you want to achieve so that you can create your personal retirement road map. If you planned to take a road trip, you would never just get in the car without first knowing your destination and deciding on the best route to get you there. Before hitting the road, you would do a safety check to make sure your car was in good working order, and you’d make sure to fuel up as needed. The same principles apply to retirement planning.
First, you need to articulate your financial goals. What do you envision for your long-term future? What does your ideal retirement look like? Will you be working in some capacity, perhaps as a semi-retirement, for some of this time? Will you relocate? Downsize your home? While of course life happens and your goals grow as you do, starting the conversation now can help you frame your expectations and come to an understanding of the big-picture parameters you will work within as you move towards your dreams.
Next, you’ll start filling in the details of your road map. What financial milestones will you need to reach in order to meet your retirement goals? This is when a trusted fiduciary financial advisor can help you come to an understanding of your situation by helping you “pre-experience your retirement” — through wealth forecasting analysis that takes into account different market scenarios, different asset allocations, and different spending levels, an advisor can help you clearly envision how your retirement will play out. This way, you see how much you can safely spend every year, and how your portfolio will do throughout your retirement in a variety of possible scenarios.
