For Mark Roberts’ Use: We hear a lot of questions in the financial planning industry, but one seems to be the most important in the minds of our clients: When can I retire? You’re no doubt in a hurry to begin enjoying your retirement, so we’ve put together a list of steps for you to evaluate that timeline.
Understand your investments. First you need to gather all of your account statements, from all retirement savings accounts or other investments, and gain a solid understanding of how much money you have already saved. If you’re still several years away from retirement, we do of course hope for these assets to grow a bit.
Use a retirement income calculator. Using the information you just gleaned in the first step, now use a retirement income calculator to generate a prospective income. Be prepared to answer questions about your assets, current age, salary, and your expected retirement date. If you aren’t sure of your retirement date, guess at one that sounds reasonable to you. The point is to get an idea of your potential income if you retire on that date; you can always make adjustments depending upon your results.
Review your potential income. Once the calculator generates a potential income for you, add this number together with your estimated Social Security benefits (some calculators will go ahead and take this step for you). Now, compare this number to your current income. If your prospective retirement income equals at least 70 percent or more of your current income, you are probably on the right track to retiring by the date you chose. If
Re-evaluate, if necessary. If your prospective retirement income falls below 70 percent of your current income, you might need to re-evaluate your retirement plan. This might mean that you postpone your retirement date until you save more money and pay down some debts. Or, if you fell just a bit short of your target savings goal, you could start saving more each year. Another option is to plan on working part-time in retirement, although this plan can quickly become complicated if you experience health problems.
We recommend that you complete these steps under our guidance, so that we can help you assess your individual income needs. Call us to set an appointment, and we can help you calculate your expected retirement income, decide upon a target date to retire, and help you adjust your strategy if needed.