To determine your total retirement needs, you can’t just estimate how much annual income you need. You also have to estimate how long you’ll be retired. The longer you are in retirement, the more years of income you’ll need to fund it. The length of your retirement will depend partly on when you plan to retire. This important decision typically revolves around your personal goals and financial situation. For example, you may see yourself retiring at 50 to get the most out of your retirement. Maybe a booming stock market or a generous early retirement package will make that possible. Although it’s great to have the flexibility to choose when you’ll retire, it’s important to remember that retiring at 50 will end up costing you a lot more than retiring at 65.
If you’re lucky, your expected income sources will be more than enough to fund even a lengthy retirement. But what if it looks like you’ll come up short? Don’t panic—there may be steps that you can take to bridge the gap. We can help you figure out the best ways to do that, but here are a few suggestions:
• Try to cut current expenses so you’ll have more money to save for retirement.
• Shift your assets to investments that have the potential to substantially outpace inflation (but keep in mind that investments that offer higher potential returns may involve greater risk of loss).
• Lower your expectations for retirement so you won’t need as much money (no beach house on the Riviera, for example).
• Work part-time during retirement for extra income.
• Consider delaying your retirement for a few years (or longer).
Calculated from Consumer Price Index (CPI-U) data published by the Bureau of Labor Statistics, January 2021Source: Broadridge Investor Communication Solutions, Inc.
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