Retirement can be an extremely rewarding time in your life, but if you are not financially prepared, it can also be a very stressful time. How do you know how much money is enough to last through your golden years?
There is no "magic number" that applies to everyone. You're an individual – not a math equation. Do you plan to work part time, volunteer, travel, spend more time with the grandkids or simply take it easy? It's probably a combination of these – but how much money you need to retire depends on what you want to do.
No matter what your plans are, it's a good idea to discuss your retirement plans with your Edward Jones advisor. Then, together you can determine a realistic goal and figure out "your number." That way, you'll have a better idea of what strategies make sense to help achieve your specific goals.
Here are 5 strategies to consider as you make your plan.
- Establish your retirement goals
The first step is identifying your specific retirement goals. That way, you have a better idea of how much you need and when you need it. The earlier you start planning and investing, the greater your potential returns. How much income you need to save depends on what retirement looks like for you. Think about things like your travel plans and hobbies, if you will work after retirement and where you want to live. Once you determine how you want to spend your time you can develop a savings strategy designed to help you meet your goals.
- Decide when you will retire
Deciding when you will retire will have an impact on how much you need to save. It's important to have a basic idea of how long you should expect to be retired. You'll need to make sure you have enough money to support yourself for the entire length of your retirement. No matter what age you have in mind to start your retirement, it's a good idea to start saving as soon as you can. When deciding when you'd like to retire, think about the lifestyle you want, your health and your current financial obligations and living expenses.
How long you'll live will also impact how much you have to save for retirement. According to the Government of Canada, today’s Canadians live longer than past generations. It may be smart to budget for 30 years of retirement or more.
- Determine your living costs
After you think about what retirement looks like for you, outline your expenses to develop a reasonable estimate of your future spending.
Consider separating expenses into:
- What I need to spend: mortgage, utilities, food
- What I want to spend: travel, entertainment
- And don’t forget major expenses like taxes and appropriate insurance coverage for your family, such as, life insurance, disability insurance, critical illness insurance and long-term care
- Review your income sources
When you plan to retire can also affect how much income you'll receive from outside sources. Think about where your income will come from, such as, employer sponsored pension plans, personal retirement savings and investments, Canada Pension Plan and Old Age security.
- Are your retirement savings on track?
Once you have completed the review of your retirement goals, living expenses, savings and income sources you will have a complete picture of where you stand. You can also use our Retirement Savings Calculator if you need additional assistance.
We can help
At Edward Jones, we can help you achieve your financial goals. Contact your local Edward Jones advisor about a financial strategy that makes sense for you. "Will I have enough?" is a big question. It deserves a conversation with someone who can help you see the whole picture and partner with you through life to keep you on track.