In the retirement planning world, one of the most common questions we hear is, “How much money do I need to save before I can retire?” However, an even more pressing one might be, “When can I retire?” After all, retirement sounds like a lot more fun than a daily commute to a boring office. Most people would retire right now if they could!
Actually, these two questions are closely entwined. Answer one, and you can get a pretty good clue that helps you decipher the other. So let’s take a look at your retirement plans so far, and see if we can use that information to help you determine a retirement date.
Your retirement dream. Are you planning to stay right where you are, in your old family home? Or do you hope to sell it and live out your retirement dream elsewhere? Are you eyeing any expensive hobbies or travel, or are you more content with community organizations and your weekly bridge club? Deciding what you want to do in retirement, and where you want to do it, can help you put a price tag on your dream.
The price tag. Now that you can envision your ideal retirement, how much will it cost? You might have heard the common rule, that retirees need to generate about 80 percent of their current income in order to continue their current lifestyle. But what if your lifestyle will vary considerably in retirement? You might need more money, or maybe you can get by with less. This information can help you decide how long to continue working.
Your health. If you decide to keep your Federal Employee Health Benefits, the government will pay a significant portion of your premiums. But remember to budget for the rest, and keep in mind that health problems are more common as we age. That means your out-of-pocket expenses, for things like medication and special equipment, will also rise.
These are just some of the things you should consider when setting a target retirement date. For more advice on financial planning, give us a call and we will be happy to help.