Nest Egg “Numbers”
Does anyone else remember those commercials about your retirement “number”, where people were pushing around an egg with a number on it? Or maybe you’ve seen the recent article about which multiple of your salary you should have saved by each decade of your life. While rules of thumb can be very helpful, I think they are most useful for those who are still decades away from retirement. For those of us who are closer to retirement than not (I’m looking at you, Gen Xers) a more specific understanding of your situation is necessary. One thing I’ve learned running retirement plans for people whose financial position runs the gamut from “broke” to “flush” is that there is no specific amount of money that everyone should plan to reach by the time they retire. Obviously, everyone’s situation is different.
What does your ideal retirement look like?
You need to figure out what you would like your life to look like in retirement and work backward from there. A woman with a pension whose house is paid off will need a smaller pool of investments from which to draw in retirement. If you have big travel dreams, and children who will still need your assistance (and let’s be honest, maybe parents) you will need to have more saved. I can’t promise you that you’ll achieve your ideal retirement, but you definitely won’t be able to prepare at all if you don’t figure out what it is. I’m not talking about specific numbers here, but I’m referring to figuring out what kind of life you would like to lead. Advertisements geared toward retirees (or those who would like to retire) mostly show ridiculously fit, white-haired people sailing, cruising, or otherwise frolicking in the sun. This may be exactly what you have planned, or you might prefer to stick closer to home. The point is that your dreams have a different price tag than your neighbor’s. Figure out what it is that YOU want, and then work on some advanced planning with an advisor to determine what price tag that will have.
But how will you know how much to save and when you can retire?
Of course you need to plan; I’m not advocating “winging it”. At the most basic, you need to figure out how much money you plan to spend each year, how much recurring income you’ll have (social security, pension, rental income, part-time work, etc.) and calculate the difference. Then figure out how much of a nest egg you will need to generate income equal to the difference. Working with an advisor on developing a retirement plan is strongly advised, as the above doesn’t factor in inflation, fluctuating health care costs, and the fact that spending in retirement isn’t usually a straight line. The bottom line is that there is no one number, no rule of thumb that fits everyone. You don’t need to know a “number”, you need a plan.
Have you made up your mind on just about everything, even before you know what it is? For instance, when you meet someone, is your opinion of the person formed from the first impression? Or, when you hear a political argument from the other side, is your mind opened or closed? Are you able to concede the “good points” the other side make, or do you dismiss the whole argument?
The annual meeting is rescheduled to sometime later this quarter and the family reunion is sometime next summer, but like certain holidays and your birthday you know you can always count on a few specific dates. It’s reassuring. One such day is Tax Day, AKA April 15. Yet, unlike a birthday this looming deadline tends to sneak up on you in the least enjoyable way.
It’s certainly no secret that healthcare costs have escalated in recent years, and there’s no reason to believe that the end is in sight. But whether you have a comprehensive health insurance policy or have purchased a catastrophic policy, there are ways to save on healthcare costs.
Here are just a few: