By Kevin Theissen
“Will I outlive my retirement money?”
That’s one of the top fears for people who are starting to prepare for their retirement years.
So I have to tilt my head a bit when I see headlines that say, “Here’s how much money Americans think they need to retire comfortably.”
$1.9 million is the number, according to a nationwide survey of 1,000 employed 401(k) participants by a well-known financial services company. In 2019, the same survey reported the number was $1.7 million. But this year’s pandemic increased the total by $200,000.
The figure is $1.9 million, a realistic figure for retirement? It’s hard to say. The survey didn’t ask participants how they arrived at that figure or what information they used to draw that conclusion.
Determining how much money you need in retirement is a process. It shouldn’t be a number that you pull out of thin air. The process should include looking at your current financial situation and developing an approach based on your goals, time horizon, and risk tolerance. The process should take into consideration all your potential sources of retirement income, and also may project what your income would look like each year in retirement. A significant figure like $1.9 million does little good if you’re uncertain what it means for your retirement years.
Ultimately, your ideal retirement is based on your expectations of maintaining your standard of living “forever” and then passing on something significant to your family and friends. So, develop a retirement strategy designed to help you pursue the retirement you deserve.
Kevin Theissen, is the owner of HWC Financial.