Retirement Planning
Many Americans realize the importance of saving for retirement, but knowing exactly how much they need to save is another issue altogether.With all the information available about retirement, it is sometimes difficult to decipher what is appropriate for your specific situation. HFG understands that your retirement age is dependent on how much money is needed to maintain the lifestyle you desire – not by how many years old you are. No matter what age you are, you can begin to plan a comfortable retirement through HFG’s intelligent retirement planning services. |  |
There are several factors that can help you work toward a retirement savings goal. The first factor to consider is the age at which you expect to retire. In reality, many people anticipate that they will retire later than they actually do; unexpected issues, such as health problems or workplace changes (downsizing, etc.), tend to stand in their way. Of course, the earlier you retire, the more money you will need to last throughout retirement. It’s important to prepare for unanticipated occurrences that could force you into an early retirement. Life Expectancy Although you can’t know what the duration of your life will be, there are a few factors that may give you a hint. You should take into account your family history—how long your relatives have lived and diseases that are common in your family—as well as your own past and present health issues. Also consider that life spans are becoming longer with recent medical developments. More people will be living to age 100, or perhaps even longer. When calculating how much you need to save, you need to factor in the number of years you will spend in retirement. Future Health-Care Needs Another factor to consider is the cost of health care. Health-care costs have been rising much faster than general inflation, and fewer employers are offering health benefits to retirees. Long-term care is another consideration. These costs could severely dip into your savings and even result in your filing for bankruptcy if the need for care is prolonged. Factoring in higher costs for health care during retirement is vital, and you might want to consider purchasing long-term-care insurance to help protect your assets. Lifestyle Another important consideration is your desired retirement lifestyle. Do you want to travel? Are you planning to be involved in philanthropic endeavors? Will you have an expensive country club membership? Are there any hobbies you would like to pursue? The answers to these questions can help you decide what additional costs your ideal retirement will require. Many baby boomers expect that they will work part-time in retirement. However, if this is your intention and you find that working longer becomes impossible, you will still need the appropriate funds to support your retirement lifestyle. If you think you have accounted for every possibility when constructing a savings goal but forget this vital component, your savings could be far from sufficient. Inflation has the potential to lower the value of your savings from year to year, significantly reducing your purchasing power over time. It is important for your savings to keep pace with or exceed inflation. Many retirees believe that they can rely on their future Social Security benefits. However, this may not be true for you. The Social Security system is under increasing strain as more baby boomers are retiring and fewer workers are available to pay their benefits. And the reality is that Social Security currently provides only 20% of the total income of Americans aged 65 and older with at least $44,000 in annual household income.1 That leaves 80% to be covered in other ways. And the Total Is… After considering all these factors, you should have a much better idea of how much you need to save for retirement.
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