Do you want your money to last as long as you do? Of course you do. No one wants to run out of money when they’re old. And I don’t know anyone who doesn’t want to enjoy retirement, whether that means traveling, spending time with family, or giving time to charity.
If you want enough money to support your dream retirement lifestyle, first determine how much money you need to retire comfortably. What will your retirement cost? In my view, the amount of money you have is not as important as how much you spend. You could have $100 million, but if your cost of living is $25 million a year, then you will run out of money in four years. However, you could have $1 million saved, and spend $30,000 a year, which would allow you to have money for 33 years.
In other words, I believe projecting your future cost of living is the first step in financial planning for retirement. To begin, I suggest you decide where you want to live. Will you downsize your home? Will you live in a big city or a small town? Will you move somewhere less expensive, maybe even out of the country? The cost of living from place to place is very different and can have a big impact on your retirement timing and lifestyle.
Next, you should consider other costs. Will you have a mortgage or other debts? What are your other expenses? Make a list and include everything, such as everyday expenses, costs you incur once a year, like property taxes and insurance, and money you’re tithing or giving to charity. And don’t forget the cost of having fun. If you want to travel or play golf, for example, take these expenses into account.
Once you’ve calculated your expenses, we suggest you add ten percent. In my view, if you want to retire comfortably, it’s better to overestimate how much money you will need. Using this number, you can design a plan that is more likely to help support the retirement lifestyle you want.
We’d love to help you with this cost-of-living exercise, at no charge or obligation. We want to help you have the retirement lifestyle you want—one that includes financial peace of mind. Meet with one of our advisors today for a free consultation that will help you determine how much money you need to retire comfortably.