SFP Retirement My Way Q+A, How Much Do I Need to Retire

| March 10, 2021
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Emily from Kansas saw a commercial that stated that she needed $1,000,000 in order to retire comfortably.

How much money do I need to retire comfortably?

  • Everyone’s situation is different, and their plan should be custom and unique to them.
  • Focusing on a specific dollar amount is not beneficial because retirement is really about income and not the size of the nest egg.
  • The amount of income that can be generated by the nest egg can differ greatly depending on how that nest egg is positioned.
  • Guaranteed income should be the focus to protect from a market downturn.

Does it matter what part of the country that I retire in?

  • Where you decide to live in retirement will greatly impact your standard of living.
  • New York City is going to have a much more expensive lifestyle than rural Kentucky and should be factored when planning for retirement.
  • Where you retire is not only about the cost of living but should also consider how you spend your days.

How much does my lifestyle factor into retirement?

  • Your hobbies and interests will greatly impact how your money should be positioned in retirement.
  • Golf and boating will be much more costly than bird watching and nature hikes.
  • The more costly the activities, the more you are dependent on your nest egg to produce reliable income.

What other factors should I consider with respect to my retirement?

  • Inflation can be devastating to someone’s retirement plan.
  • The cost of living is directly impacted by the inflation rate.
  • Tax rates are also a major part of retirement planning.
  • For every dollar that you pay in taxes, its one less dollar to spend on yourself.

  One of Ryan’s listeners, Emily from Kansas, asks Ryan how much money is needed to retire comfortably.  Emily had recently watched a television commercial by one of the mainstream investment companies, and in it they stated that a person would need to have $1,000,000 saved for retirement to live comfortably. She wanted to know what Ryan’s opinion on this number was and if he was recommending that to his clients.

Ryan had a very different viewpoint on this line of thinking compared to that of the commercial the Emily watched.  In Ryan’s experience it is not productive to focus on a specific number.  He gives the example that $1,000,000 in Kansas would go a lot further than $1,000,000 in New York City. 

Instead of concentrating your energy into a specific dollar amount, Ryan advocates to focus on what you would need for expenses in retirement.  This line of thinking is the backbone to Ryan’s Retirement My Way process. 

This is where Ryan helps his clients figure out exactly what they need for basic expenses in retirement, like food, clothing and shelter.  The next part is calculating what they would need for the fun stuff, like travel, time with the grandkids, and golf.  Once there is a total number for expenses in retirement, he then looks at the income streams.

The priority is maximizing social security and getting the most out of it.  Looking at your life expectancy, and different filing options, Ryan and his team make a recommendation on how to file.  If you are lucky enough to have a pension, he’ll also look at ways to maximize that as well. 

Once, he has identified your “mailbox money” (social security and/or pensions), the next steps would be running an analysis of what your projected expenses will be versus what you have coming in.  The difference or shortfall is your retirement income gap.

Ryan will solve that income gap using your 401Ks, IRAs, 403Bs, TSAs and other retirement savings plans to create guaranteed monthly income that will solve for the income gap. These plans are protected from market loss and volatility. They are designed to keep pace with inflation, and last as long as you do.

Ryan stresses that it is not the size of the nest egg, but what you do with it.  His clients benefit from focusing on the retirement income, not the size of the account balance, especially when that balance is subject to stock market risk.  As you may have heard, here today gone tomorrow.  In Ryan’s opinion, retirement should focus on safe, steady, conservative returns. 

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