People are living much longer than they did decades ago; the reality is that many couples will live into their 80s and beyond. With that being said, it’s not realistic to think that you can retire comfortably on just your social security benefits. You need to save up a significant nest egg to finance your retirement to avoid going back to work in your 70s or running out of money. So how do you know if you’ve accumulated enough and how do you tell when it’s time to retire?
All Your Debts are Paid Off
Sadly, more and more people are heading into retirement with onerous burdens on their shoulders. If you end up holding a mortgage into retirement or if you’ve recently helped your children or grandchildren pay for school, know that it can be challenging to make these kinds of payments when you’re on a fixed income. Most retirees cannot afford extra payments on credit card debt as they cannot generate more income to repay them. So, if you have monetary obligations that are still not yet paid off, it’s best to settle them before you retire.
Your Savings Will Cover Your Lifestyle
When you retire, your savings portfolio will need to cover the lifestyle you want to live. Some experts estimate that you need to save a whopping 80% per year of your current income to continue to live at the level you are already comfortable with. Saving 80% of your income, even in your later years, is somewhat unheard of. So, know that upon your retirement you will need to live a slightly less extravagant lifestyle. If you feel you’re not there yet, it makes sense to work a little longer to save more before you officially call it quits.
You Have Enough to Cover Health Care
Healthcare fees can be one of the most significant expenses you’ll face in retirement. As you age, there is a possibility that you or your spouse will require a decent amount of money to cover for home care or an old age home. Having an adequate plan that you can afford is essential for when you retire. If you don’t have enough saved up to cover your estimated healthcare costs, it’s best to hold off retirement until you do.
The Market is In Your Favour
The earliest years of your retirement could define how you live in your later years. If you suffer an investment loss in your early years or have even one bad year, your odds of having enough money the whole way through could deteriorate depending on the severity of the loss. If the markets are not in your favour, it may be worth waiting until they start to look more promising and your investments return to a level that will allow you to retire comfortably.
The goal for successful investing is more straightforward than you think – grow your savings to a point where the money will generate enough income to support your lifestyle through retirement. Your goal should be to obtain financial freedom where you can spend time with your loved ones and have your money outlive you. At The Beacon Group of Assante Financial Management Ltd., we help put you on the path to financial freedom so you can retire when you want to, not when you have to. Contact us today.