Do I have enough to retire?
Here at www.retirementnext.com this is the most common question we get; “Do I have enough to retire?” As in all answers to this question, there has to be “a qualifier” and I know you don’t want to hear the answer, “It depends”.
MONEY Let’s assume, like most people, when you ask the question, “Do I have enough to retire?”, you are referring to money. In a related article on retirementnext we gave you some great links to helpful retirement calculators (Retirement Calculators links here). But you are still going to have to do some homework and some self-examination.
Here are the factors the effect your ability to retire, financially:
- How much money you have saved for retirement.
- Financial ( stock, bonds, funds, etc
- What periodic income your savings will generate.
- The annual return of your 401k or your IRA
- How that return may change in the future
- What other income you can earn during retirement.
- What will you spend to live.
If you can spend some time getting those answers, the calculators on the link above ( calculator link here ) will be able to help you. Still not satisfied and want a very simple answer to a very complicated question without doing any work?
Simplest answer to the question: Do I have enough to retire?:
- What will my annual expenses be in retirement?
- What will my annual social security and defined benefit plans distributions be?
- Subtract 1 from 2 and multiply times 25.
This formula: (Annual Expenses – annual benefits) X 25 allows that you will draw down 4% of your savings annually.
If your annual expenses are $75,000 and you have annual benefits are $36,000; $75,000-$36,000 = $39,000. You will need $39,000 X 25 = $975,000. This is a good time to be honest with yourself on your retirement plan.
All the financial wellbeing in the world is not going to help you if you do not have “enough health” in your retirement. “Do I have enough to retire?” What? Energy? Breaths? Stamina? Here is a link to four articles, the first one I urge you to pay attention to. At retirementnext we urge you to spend as much time on your physical health as you need to spend on the financial health.
Good luck with your retirement planning.