Evaluate How Much You Need for Retirement

Many people who are saving for retirement haven’t taken the time to figure out how much they may need when they retire. Financial planners who do pension consulting point out that saving without a goal could leave you in trouble when you reach retirement. After all, how do you know if you’re saving enough if you don’t know how much you may need?

Factors to consider

One way to start figuring out how much you’ll need in retirement is to look at how much you’re spending now. That will at least provide you with a starting point. Remember, though, your expenses will change after you retire:

• Expenses that may go down include income taxes, mortgage payments (particularly if you downsize), utilities, and expenses for children. Also, you may save money on commuting expenses (including gas, tolls, car payments, and insurance) and other work-related costs like clothing.
• Expenses that could go up include travel and entertainment costs and health care. While joining Medicare can reduce your expenses, you may need additional insurance and your costs may go up if your health declines.

Most financial advisors believe you’ll need about 80 percent of your current income in retirement to maintain your current standard of living.

Review Your Income

You’ll need to assess any income you’re going to receive in retirement, such as Social Security, a pension, rent from property you may own, or other recurring income you receive. Once you add up your income and subtract your expenses, you’ll know how much you need have saved by the time you reach retirement.

Crunch the Numbers

While these calculations can seem daunting, there are a number of online calculators that can help you assess your retirement finances and see how much you need to save, like this one published by the Financial Industry Regulatory Authority (FINRA). To help plan participants get ready for retirement, FiduciaryFirst, a pension consulting firm, leverages the power of The Participant Effect^SM, a program that uses behavioral finance to help participants make better financial decisions. For more information, contact us at www.fiduciaryfirst.com or call 866-625-4611.

Tracking Number: 1-605636 This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material. Retirement Plan Consulting Program and other advisory services offered through LPL Financial, a registered investment advisor.