If you've started retirement planning or watch enough television, you've heard about the idea of finding your retirement "number."
If you're not familiar with the concept, your number is not the ideal age when you want to retire - it's the amount you should have saved by that time to maintain your desired standard of living in retirement. The Internet is full of free calculators that can not only tell you how much you'll need to have saved by the time you want to retire, but also provide benchmarks for different ages.
However, this concept of having a set-in-stone figure may be outdated. Between the time you use one of these calculators and your actual retirement, many factors can change. These include:
- Life expectancy: People are living longer these days, and there's no telling what scientific miracles will come in the new few decades. Medical innovations are extending our lifetimes, and you need your nest egg to cover those additional years you tack onto your life.
- Lifestyle changes: What do you see yourself doing in retirement? There's a good chance it's a lot different than what you're doing now. This ideal future can increase or reduce the amount you need to save. If you plan to live in a cabin in the woods during retirement, for example, you'll likely have fewer expenses.
- Health costs: Getting older means a higher chance of developing certain illnesses and suffering certain injuries, and Medicare covers only so much of your medical expenses. Picking up the tab for the rest can strain your savings, and considering your don't know what is coming in the future, it's hard to budget for these unknown costs.
Staying on track for a comfortable retirement
These and other factors are not to say you shouldn't be working toward some goals. Yet, they do indicate that you should regularly evaluate your retirement needs. Retirement planning is not something you can do once and forget about until it comes time to say your final goodbyes at work.
Speak with a financial advisor at least once a year to make sure you're on track to meet your goals. Also, ask about which retirement accounts and insurance products are best for your retirement plan. These can include annuities, life insurance and long-term care insurance.
For more information on effective wealth management strategies, contact Landmark Bank.
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