After many years in the workforce, you might feel like it’s time to retire. This is a big milestone and you may be emotionally ready, but how do you know if you’re financially ready? There are a few key questions you need to answer before deciding if you’re at a place where you can comfortably retire.
Are your savings on track for your retirement? Find out with Union’s Simple Retirement Calculator.
How much money do you need to retire?
This is typically the first question Americans reaching the retirement age often ask – “how much money do I need to have saved up in order to be able to retire?” It’s a great question but unfortunately its a question with no one right answer and many factors to consider.
A way many experts suggest you determine the answer to this question is to follow the 80% rule. This is the rule that says you should have a goal of replacing 80% of your pre-retirement income.
Since the whole purpose of saving for retirement is to be able to cover your costs of living once you are no longer working, it’s important that you take the time to forecast what those expenses are and what they might be ten or fifteen years down the road. This will quickly tell you if you’re going to be in a position where you won’t be able to afford what you want or need.
Important budget items to plan for include:
- Health care costs
- Discretionary spending
Where are your funds going to be coming from?
When considering your budget, it’s important to identify where your funds will be coming from. Do you have a 401K, IRA, are you relying on savings or Social Security?
If you were planning on relying heavily on Social Security, you need to know that social security is estimated to cover only about 40 percent of the average Americans annual pre-retirement earnings. If you are able, wait until your full retirement age which is typically age 65 to 67 depending on your date of birth. The longer you wait to retire, the higher your claim will be when you do.
What if you haven’t saved enough?
If you aren’t in a strong enough financial position to retire you may need to continue to work for a few years to catch up on saving. If that is not something you want to consider, come up with a plan to make money during retirement. One option many retirees utilize is finding a part time job to supplement their savings and social security.
You also have the option of scaling back your life style and spending. Relocating to a smaller home or an area with a lower cost of living
Count on Union Trusted Advisors for Retirement Advice
If you’re concerned about what your financial situation will be like when you retire, it’s time to talk to an expert. We can help you determine if you’re financially ready to retire and help you create a savings plan that will get you back on track.
It’s never too early to sit down and have a conversation with an expert to help you answer these difficult questions. Set up an appointment today with a UNA Financial Consultant. We are the expert team you can trust to help you meet your financial goals today.