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Posted by UtahCribs, Real Estate, Homes on March 25, 2009

Richard Janke / Heritage Financial Group
Contact: 801-706-5299 / richard.janke@heritagefinancialgroup.com

HOW MUCH MONEY WILL YOU NEED FOR YOUR RETIREMENT? This is a very interesting concept especially considering the status of our economy.
Unless you have a crystal ball telling you how long you will live, or how healthy you will be in the coming years and how the economy and inflation will unfold in the decades ahead, unfortunately there is no way to answer that question with rock hard certainty.

One thing is for certain, to many people are trying to retire on too little money. This is a scary thought considering the the status quo! As a result, according to one survey, there are currently about seven million retirees who have returned to the work force and a third of them because they need the money.

Many of us plan to continue being active after retirement and this may include working part-time or starting a business. While this is a positive choice, there is a BIG difference between choosing to work after retirement and having no choice but to go back to work!

WHAT CAN YOU DO? The best choice is to prepare well and in advance so that you avoid any unpleasant surprises. With that in mind, I would like to offer some guidelines that you should consider when you are preparing your retirement.
– YOU MAN NEED MORE THAN YOU THINK- Part of the “problem” is that you probably will want to travel, enjoy time with grandchildren and have enough money to do more than just sit on the front porch in rocking chairs. So how much money will you need? One helpful rule of thumb that comes up consistently in several studies says you will need 75% of your pre-retirement income to maintain your standard of living in retirement. For example, if your household currently earns $80,000, you will need $60,000 a year in retirement.
-YOU MAY NEED RETIREMENT INCOME LONGER THAN YOU THINK- In terms of gross dollars, let’s say you will need an income for approximately 20 years. This is based on actuarial tables that say a man retiring at the age of 65 will live 16 years and woman will have a life expectancy to age 85. Assuming a 20-year estimate, if you currently need $50,000 a year to retire, you will require $1,000,0000 total over the next 20 years.
-YOU MAY NEED TO CONSIDER THE COST OF LIVING- Don’t overlook inflation. Even if inflation is fairly modest, it can devastate purchasing power over time. For example, let’s say you retire on $50,000 a year in 2008. You live 20 years. If the inflation rate averages only 3%, by the time of your death in 2028, all other factors being equal, you will need $90,500 per year to maintain the same standard of living. If inflation averages 5%, you will need $132,500.

THE GOOD NEWS: It is possible to build in many safeguards to help protect your long-term financial security in retirement, including annuities, mutual funds or other financial vehicles. With an annuity, for example, you can eliminate much of the guesswork mentioned in this article. Best of all, you can pick from many features, including a locked in, guaranteed income for life, as well as cost of living options. Please keep in mind that there are fees and expenses associated with an annuity product.

Your financial advisor can help you identify your needs, as well as review option and best-choice strategies based on your individual needs and situation. Contact your advisor today. There is not cost or obligation.



  1. Brad Miles said

    Nice article Rich. Interesting stuff to think about.

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