Retirement Meditation #4: What is the right amount to save for retirement?

Insights | Retirement Meditation #4: What is the right amount to save for retirement?

Author: Paul A. Carl, CHSA, CPFA​Vice President, Retirement Plan Consulting, Registered Representative

I’ve met a lot of people in my more than 35-year career in the retirement plan industry. 

Many individuals have said to me, “I wish I had started saving earlier,” or “I wish I had saved more.” 

Others have said, “I wish I would have invested more aggressively,” or “I wish I would have invested more conservatively.” 

You get the idea; hindsight is 20/20 and there’s always something we think we could have done better.

Here’s an important fact: No one has ever said to me they saved too much money for retirement.

A great initial step is to determine a savings goal. Most recordkeepers as well as general financial websites offer a variety of retirement planning tools. Completing the data accurately and running the projections will help you to identify a goal and provide you with an idea of where you stand in pursuit of that goal. 

Remember, as mentioned in my previous blog posts, this is a process and not a one-time event.

Trusted advisors and financial planners can assist as well by helping you understand or uncover information that will provide a more holistic picture. For example, how much will you need to spend throughout retirement.

Spending estimates are a critical component to financial success in retirement. In addition to life expectancy and ongoing normal budgetary considerations like food, clothing and shelter, retirement savings should allocate funds towards expected health care costs and even the potential need for intermediate- or long-term care. 
“Impulse purchases” are often overlooked when planning for retirement. Even well thought out decisions to purchase a new vehicle or take a family trip can be considered an “impulse purchase” if it was not included in your financial plan for retirement. Impulse purchases throughout retirement can damper, if not damage retirement savings.

So, what do you think is the right amount for your retirement nest egg?

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