The ability to realize your ideal retirement often depends on the strength of your financial foundation. However, the real challenge isn’t just building a solid nest egg—it’s setting your plan up in a way to make it last. Even a well-funded retirement account can shrink faster than expected due to unforeseen expenses, shifts in lifestyle, and market volatility.
So, how can you determine whether your retirement savings will sustain you throughout your golden years? It requires more than a simple calculation. You need to take a detailed, personal approach, considering the lifestyle you envision, the assets you’ve accumulated, your projected expenses, and potential income streams.
Let’s break down the key steps to help you evaluate whether your nest egg is built to last.
When Do You Want to Retire?
The first thing to consider when deciding how much money you need to save is your age, both now and in retirement. If you wish to retire early, you have fewer years to save for a longer retirement. Additionally, if you begin receiving Social Security payments prior to reaching full retirement age, you’ll have to account for a lower monthly payout.
The state of the stock market can also influence how much money is required and how long it lasts. Of course, you can’t actually predict the state of the stock market when you retire, but it’s still a wise idea to plan for the possibility of retiring in a bear market.
What Type of Lifestyle Do You Envision for Yourself?
Have you given any thought to the kind of retirement lifestyle you want to live? If you’re certain you want to travel, play golf, or spend time with your grandchildren, consider what that entails and the associated expenses.
For example, if you intend to travel, ask yourself the following questions:
- Do I want to travel abroad or domestically?
- How frequently would I like to travel?
- How would I prefer to travel? (e.g., car, airplane, or RV)
- Where would I like to stay? (e.g. a five-star hotel, an Airbnb, or with family members)
- Do I want my family to join me on the trip? Do I plan to cover their expenses too?
- Can I continue to live at my primary home? If so, who can watch my house and maintain it while I’m traveling?
Even if your dream is simply to spend time with your grandchildren, you should still think through the associated costs. To some, spending time with grandkids means babysitting a few times a week. For others, it means footing the bill for various trips for the entire family.
Either way, plan out the specifics of your vision so you can see how much money is needed to make that dream a reality.
What Is Your Current Debt Level?
Let’s talk about another retirement-income influencer: debt.
There are two significant drawbacks of taking on debt in retirement:
- It reduces your cash flow for non-essential items like housing, travel, and hobbies.
- It can deplete your retirement funds more quickly, meaning you might eventually run out of money or have to change your lifestyle.
If you carry debt, a smart move is to carefully examine your debt and determine how much cash flow you need in retirement to pay for anticipated expenses.
Before they retire, some people prefer to pay off any high-interest consumer debt. Some even go so far as to pay off their auto loans and mortgage.
Are You Planning to Work in Retirement?
One of the better ways to stay active, keep your mind sharp, and feel purposeful after retirement is to work.
Some retirees decide to pursue consulting as a second career. Others choose to take a part-time, low-stress job and work at a retail store or family office.
Whatever you decide, you won’t need to save as much to live comfortably if you plan to work after retirement.
Speak With a Retirement Planning Advisor
Evaluating your retirement savings means taking a close look at your finances, lifestyle expectations, debt, and long-term goals.
As your financial partner, I prioritize your unique retirement vision, supporting you with a clear plan to pursue financial stability. Allow me to handle the details so you can enjoy peace, knowing your future is in trusted hands.
Email me at jim@glhcfinancial.com or call 916-967-3208 to see how I can guide you toward your ideal financial future.
About Jim
James Callens is a financial advisor at GLH&C Financial Services, a full-service, comprehensive wealth management firm. Jim has over 30 years of experience in the financial industry and uses his extensive resources and knowledge to help his clients experience simplicity and clarity in their financial lives. Jim spent more than 20 years working for GE Financial Advisors, both in its insurance services department and as a regional manager and financial advisor. He took part in GE’s Six Sigma Quality Training program and completed the National Association of Life Underwriter’s four-year LUTCF course. Jim also earned his certificate in financial planning from the University of California at Davis. In 2011, Jim combined his own firm, Callens Financial Group, with GLH Financial Services, creating GLH&C Financial Services, so he could provide even more value to his clients.
Jim lives in Folsom, California, with his wife, Melissa, and his four children, Jacob, Kristen, Grant, and Andrew. Together, they enjoy outdoor activities like kayaking, bicycling, and vacationing at Lake Tahoe. To learn more about Jim, connect with him on LinkedIn.