By Kyle Louvar, CFP®, AIF®
Everyone seemingly has an opinion about how you should retire, when you should retire, and how much money you’ll need in retirement. If you were to do a quick Google search for “How much money do I need to retire?” you’ll get over 100 million results. Likewise, “When can I retire?” returns over 700 million results. With so many opinions at your fingertips, it can be hard to determine which advice is best. Thankfully, you don’t have to figure this out alone.
At Guided Capital Wealth Management, we have the tools and expertise to help you understand your current situation and plan a path toward your ideal retirement. But, before we can get to the numbers, you should ask yourself these three key questions first:
When Do You Want to Retire?
You’ve probably heard this question a million times, but it bears repeating: When do you want to retire? Are you considering early retirement or would you rather work until you’re 75? Do you see yourself taking a phased approach to retirement or diving in headfirst?
The answers to these questions will help you understand how much you’ll need in retirement and how long you need your money to last. In fact, the age you’re targeting for retirement is, perhaps, the most significant factor in your retirement plan.
Retirement stages are most often defined by when you become eligible for federal programs like Social Security and Medicare:
- Early retirement. Early retirement is defined as retiring at age 62 or earlier. If you want to retire early, you’ll have fewer years to save for a longer retirement. You can begin claiming Social Security at age 62, but your benefit amount will be smaller than if you wait until full retirement age.
- Full retirement age. This is defined as the age at which you are eligible to receive full Social Security benefits and Medicare. The full retirement age is currently 66, but it will gradually increase to age 67 for those born after 1960. Currently, Medicare is available for those 65 and older.
- Delayed retirement. Delayed retirement is defined as postponing your Social Security benefits until after full retirement age, up to age 70. For each year you delay, you will receive an additional 5% to 8% in total Social Security benefits.
You may want to consider working during retirement or taking a phased approach to full retirement. Both options mean you won’t have to save as much upfront. Whichever option you’re considering, it’s important to objectively weigh the pros and cons before making a decision.
When Will You Be Able to Retire?
You now know when you want to retire, but when will you be able to retire? A key factor in assessing when you will be able to retire is to determine the type of lifestyle you want to have in retirement.
It’s often said that retirees should plan to spend about 80% of their pre-retirement income on their post-retirement lifestyle, but, in practice, that number is subjective. Do you want to travel? Do you want to pick up a new hobby? Will you be relocating or downsizing your home? Your retirement lifestyle goals will help you determine when you will be able to retire and how much money you’ll need to live out your expectations.
Also, keep in mind that in early retirement, your Social Security benefits will be roughly 25% less than what you would receive at full retirement age. So, if you want to retire early and you’re counting on Social Security benefits, you’ll need to increase your retirement savings goals so you’ll be able to retire early.
Are Your Investments on Track to Support the Retirement You Want?
So how do you reconcile when you want to retire and when you’ll be able to retire. In other words, are you on track to achieve the retirement you’re envisioning? That’s where retirement planning with a professional comes in.
The first step in understanding if you’re on track to support your ideal retirement is to assess your cash flow. At Guided Capital, we do a complete financial plan to assess what type of investment strategy you need in order to work toward accomplishing your retirement goals. Everyone’s situation is different, so we tailor your investment portfolio to your needs.
Once we have your investment strategy lined out, we can benchmark the performance of your portfolio to your personalized return. By understanding what return you need for a comfortable retirement (the benchmark) and comparing the benchmark to the return you’re actually getting, we can immediately assess whether you’re on track to meet your retirement goals.
We incorporate periodic reviews of your portfolio in order to make real-time adjustments as necessary, including:
- Rebalancing your investments
- Increasing your savings
- Extending your retirement timeline
Review Your Retirement Plan
When was the last time you looked over your financial plan, and specifically your retirement plan? This is not something you can set and forget; your financial plan needs periodic attention to make sure it is still on track to meet your goals.
We are different from other advisors because we see your financial plan as dynamic, not a one-time thing. We use a proprietary Paradigm FORMula to plan for what matters most to you and adapt when circumstances change.
At Guided Capital Wealth Management, we can help you navigate the road to retirement. If you’re ready to stop Googling and start reviewing your retirement needs, reach out to us today! Schedule a FIT meeting by contacting us at (832) 975-0711 or by email at email@example.com.
Kyle Louvar is the CEO and Wealth Management Advisor for Guided Capital Wealth Management, a fiduciary financial advisory firm offering fee-based advice, guidance, and education. After seeing the impact that the 2008 financial crisis had on families, Kyle became fully committed to helping his clients develop a financial plan that changes as their lives unfold and their needs evolve. Spending nine years working for one of the largest brokerage firms on Wall Street, Kyle holds a high value for process, expertise, objective advice, and customized solutions. His goal is to help his clients experience confidence in their financial future through a disciplined process of financial planning, investment management, and sound financial decision-making. Kyle graduated from New Mexico State University, where he’s sat as a board member since 2015. He was also a 4-year letterman in football for the Aggies. When not helping his clients, Kyle enjoys spending time with his wife, Nicole, and their two daughters. You can often find him coaching his daughters’ softball teams, playing golf, cooking, and traveling. To learn more about Kyle, connect with him on LinkedIn.