Do I Have Enough to Retire? The Value of a Financial Plan
Retirement is one of the biggest financial milestones in life — and it prompts two common questions financial advisors hear the most:
When can I retire?
Will I have enough money?
Sure, online calculators can provide estimates of how much you may need to live comfortably in retirement. But these tools often overlook a range of factors that make each person's situation unique. A personalized financial plan can turn uncertainty into a crystal-clear roadmap.
Here’s what to expect when creating a personalized financial plan with your financial advisor: a blueprint to help you understand where you stand today, prepare for the future, and determine whether you’re on track to support the retirement you envision.
There's No Magic Retirement Number
Don’t focus on one specific dollar amount. The amount needed varies from person to person depending on your unique goals, lifestyle, and financial circumstances.
As your financial advisors, we evaluate your retirement readiness by understanding your unique situation and asking the questions that matter most. Knowing your goals and priorities allows us to develop recommendations tailored to your needs and build a plan customized for you.
During this process, we may consider factors such as:
Desired retirement age
Expected lifestyle and spending
Travel and hobbies
Healthcare costs
Taxes
Inflation
Life expectancy
Legacy goals
Retirement is personal and will look different for everyone. Your retirement plan should be personal, too.
What Does “Having Enough” Really Mean?
Before answering the question, “Do I have enough to retire?” we first define what “having enough” means for you.
Having enough means adopting a financial strategy designed to support the retirement lifestyle you want. For some, it’s traveling, pursuing hobbies, or spending more time with family. For others, it’s maintaining a comfortable lifestyle close to home. Your retirement income needs depend on the life you envision and the resources available to support it.
For most retirees, income will come from a combination of sources including:
Investment portfolios
401(k)s and IRAs
Pension income
Social Security
Rental income
Part-time work
Other savings
As your financial advisor, we look at the complete picture of your income sources and how they align with your anticipated needs and goals.
Retirement Spending
After identifying your potential sources of retirement income, the next important question is: How much will you need to spend in retirement?
Expected spending is a starting point for determining how much income you need each year. Your expenses may also change in retirement, which is why it’s important to consider both your current lifestyle and the future lifestyle you hope to maintain.
As part of the planning process, 3 questions to consider are:
How much will I spend each month?
Estimating your expected monthly expenditure is an important first step that helps your financial advisor build a personalized plan around your goals, lifestyle, and needs.
How much guaranteed income will I receive?
Your financial advisor can evaluate potential sources of guaranteed income, such as pensions and Social Security, and consider how they fit into an overall retirement strategy.
Will my investments be able to make up the difference?
If your guaranteed income does not cover all your anticipated expenses, your investment portfolio and other assets may need to provide the remaining income. This makes investment strategy, withdrawal planning, and risk management important segments of your plan.
Ultimately, “having enough” isn't simply about reaching a certain account balance. It's about understanding how your assets, income, expenses, and goals work together within a comprehensive financial plan. By evaluating the full picture, your financial advisor can help you determine whether you are on track.
Bringing It All Together: Building Your Financial Plan
Once we understand the complete picture of your retirement goals, income sources, expected expenses and assets, we can assemble these pieces into a personalized financial plan. Identifying potential gaps, evaluating your current strategy, and determining adjustments to strengthen your retirement plan are also part of that matrix.
Ultimately, retirement planning is not about finding one magic number. By creating and regularly reviewing a customized financial plan, we’ll help you better understand where you stand today and make informed decisions to best prepare for those golden years ahead.
The material has been gathered from sources believed to be reliable, however West Michigan Advisors cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source. To determine which investments or planning strategies may be appropriate for you, consult your financial advisor or other industry professional prior to investing or implementing a planning strategy. This article is not intended to provide investment, tax or legal advice, and nothing contained in these materials should be taken as such. Investment Advisory services are offered through West Michigan Advisors. Advisory services are only offered where West Michigan Advisors and its representatives are properly licensed or exempt from licensure. No advice may be rendered unless a client agreement is in place. Securities offered through Registered Representatives of Level Four, a registered broker dealer and Member of FINRA/SIPC