I’m too busy. I don’t make enough money. I don’t know where to begin.
If any of these retirement planning excuses sound familiar, then it’s time to address the elephant in the room. But how can you calculate the funds you will need for retirement when there are so many unknowns? During the early stages of planning, it’s not unusual to come up with a lot more questions than answers, like:
- How can I calculate the funds I will need during retirement if I don’t know how long I will be living in retirement?
- At what age can I afford to retire?
- How much will I be able to spend per month during retirement?
- How much will I get from Social Security?
According to Chad Waddoups, VP of wealth management at Mountain America Credit Union, here are some solid first steps to answer these questions.
- Estimate your monthly expenses for retirement. How do you envision your retirement lifestyle? Do you see yourself hitting the golf course and traveling the world? Or will you move in with your family and spend your time gardening and playing with your grandchildren? Put together a list of expected monthly expenses for the path you choose and see if they are in line with your retirement budget.
- Use your current health and family history as a guide. If you are healthy and your parents lived into their late 90s, you will likely need to plan for more years than if you have major health issues or your parents passed early from a medical condition. If you are married, don’t forget to consider your spouse’s longevity as well.
- Consider future medical expenses. Do you exercise regularly and watch what you eat? If you are fit and healthy, you will probably have lower healthcare costs. However, if you smoke or have significant medical issues, you will need to plan for higher medical expenses.
- Factor in long-term care. Do you expect to reside in an assisted living facility, receive memory care or require in-home nursing services? If so, research the costs of these services in your area and check into long-term care insurance to cover those costs. Be sure to know what exactly your insurance covers.
- Estimate how much you will get from Social Security. Use a calculator to estimate your monthly benefit (you can find one at ssa.gov). Then determine how much you need to save/invest to supplement that income to cover all your expected expenses.
If planning for retirement seems daunting, the financial advisors at Mountain America Investment Services are here to guide you through the process, making it as easy and clear as possible. The sooner you start, the more time your investment will have to grow.