Summary
Planning for retirement is essential to ensure financial security and peace of mind. This guide outlines the key questions and considerations to help you determine how much money you need to retire comfortably. From setting financial goals to evaluating lifestyle choices and income sources, it provides a structured approach to retirement planning.
1. Determine Your Retirement Age and Timeline
Your current age and desired retirement age are crucial in shaping your retirement strategy. They influence how long you have to save, the types of investments you should consider and your risk tolerance.*
- Key Points:
- Younger individuals generally can take some investment risks
- Older individuals may prefer more secure, lower-yield investments
- Early retirement requires accelerated savings
2. Set a Retirement Savings Goal
Establishing a clear financial goal is essential. Use retirement calculators that factor in your income, current savings and inflation to help you estimate your retirement number.
- Key Points:
- Avoid saving blindly – set a specific target
- Use online tools to calculate your retirement needs
3. Define Your Retirement Lifestyle
Think about how you want to live during retirement. Your lifestyle choices will significantly impact your financial needs.
- Key Points:
- Consider whether or not you are planning extensive travel
- Review desired living arrangements and daily expenses
- Be realistic about your spending habits
4. Evaluate Your Current Financial Situation
Assess your income, savings rate and current expenses. A good goal is to try and save 15% to 20% of your annual income for retirement.
- Key Points:
- When possible, clear debts before retirement for more flexibility
- Consider job changes or seek promotions to boost income
- Account for inflation and increased healthcare costs in retirement
5. Consider Working During Retirement
Some individuals choose to work part-time during retirement for financial or personal fulfillment reasons.
- Key Points:
- Freelancers, artists etc. often continue to work at a reduced pace
- Part-time work can supplement retirement income
Conclusion
While you can’t predict every variable, you can still take control of your retirement. Start early, set clear goals and adjust your strategy as needed. With careful planning, you can create a secure and comfortable transition to a post-work life.
*Content of this blog is for informational purposes only and is not a substitute for professional advice. First Internet Bank does not provide investment or retirement services and will not be held liable for any losses or damages resulting from action taken based on the information provided. Content is not reflective of everyone’s goals and objectives. Please consult with a financial advisor to determine your own goals and needs for retirement.
Investments come with risk, including the potential loss of principal. Non-Deposit products are not FDIC insured, are not deposits and may lose value.
