Are You On Track to Save What You’ll Need for Retirement?

How much money will I need to retire?

This single question may be the most common question people ask financial advisors. The answer though is a largely personal one; dependent on your age, income level, and lifestyle during retirement. According to JPMorgan Asset Management’s 2016 Guide to Retirement, someone age 45 with an annual household income of $100,000 should currently have savings equal to 3.4x his or her salary. Someone age 60 bringing in the same amount of income should have 7.3x that amount in savings.  Another way to look at it is every $1,000,000 in invested retirement savings provides between $40,000 to $50,000 (adjusting for inflation) in income per year during retirement.  These numbers can seem daunting, especially considering the variability of markets and policies regarding taxation, savings, and benefits that is largely outside an investor’s control. At Idaho Medical Association Financial Services, ensuring our clients have the lifestyle and resources necessary to live a comfortable life during retirement is our primary objective. Today, we explore important considerations to make sure you’re on track for retirement.

Understanding Your Current Financial Situation

It’s important to understand that retirement, like most financial investing plans, is individual to your goals and life situation. Benchmark numbers for retirement might give a general idea of what amount in savings the average person may need, but they don’t account for the realities of individual situations. Therefore, to fully understand the amount you will need during retirement, it’s vital to start by assessing your current financial situation.

Understand how much income you bring in each month and know where and how it’s being spent. How much per month do you spend on groceries and dining out? How much money is spent on home utilities? How much money per month do you spend on healthcare? These are all examples of monthly expenses that will change when you retire. Ideally some expenses will go down; things like transportation costs, taxes, and mortgage costs may decline in retirement. On the other hand, expect other categories to go up; many retirees see health care prices and monthly expenditures on entertainment or travel increase.

Lifestyle During Retirement

According to the same JP Morgan report mentioned above, 67% of workers plan to work until they are at least 65 or older. Yet the reality is that 23% of workers will be forced to retire earlier than anticipated due to health or family obligations. These numbers reflect the importance of preparing for retirement, often before we might expect to actually retire. In doing so, it’s important to realize the type of lifestyle you hope to live during retirement.

What are your goals in retirement? Do you hope to travel more? Spend more time with your grandchildren? Understanding the lifestyle you hope to have during retirement can make planning for – and saving for it – much easier.

Let’s again examine the 45-year-old with an annual household income of $100,000. The way this person lives now will be very different from the way he or she will live during retirement. Factors like obligations to family and work, healthcare, and other day-to-day expenses will be vastly different. During retirement, the goal is to make the lifestyle of retirement comfortable and sustainable. This is the time when you have more free time to pursue other goals. You don’t want to worry about whether or not you can afford to buy groceries.

How Idaho Medical Association Financial Services Can Help

At Idaho Medical Association Financial Services, we specialize in creating comprehensive financial plans for medical professionals, focusing largely on retirement planning. Our approach is to create a strong diversified portfolio through personalized financial planning while utilizing premium services like tax analysis and strategy, insurance and estate planning.

When creating a retirement plan for you, we take several factors into consideration. For example, we’ll examine your income at retirement, current savings in retirement plans like IRA’s, 401(k) plans or pension plans, financial investment portfolio, properties, social security, trusts and property holdings. Each plan is customized to meet your individual retirement goals. Let our team of professional financial planners create a comprehensive retirement plan to create a comfortable and sustainable retirement lifestyle for you and your family.

Idaho Medical Association Financial Services is a financial and wealth management firm specializing in personalized financial guidance to accredited investors in the medical field. Areas of specialty range from investment planning and retirement analysis to in-depth services such as tax analysis and strategies, insurance and estate planning and financial planning. For a free financial consultation, please call: (208) 336-9066 or email jared@imafs.org.