How much money do you need to retire?

On this episode of A Wiser Retirement™ Podcast, Casey Smith, Missie Beach, CFP®, CDFA®, and Michaela Laney, discuss retirement planning and demystify the “right amount of money to retire” expectation.

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When talking to the general public, there’s no way to generalize the right amount for retirement savings. Occasionally, you will find those who will tell you a specific amount is how much you should have by the time you retire. Many online calculators claim to have it figured out, and will try to tell you that you should  have 65% of what you make or 75% of what your salary used to be at a certain age. When you’re faced with one of those generic rough estimates, don’t fall for it. Instead, you should ask yourself, how can they know how much I need if they have no idea when I want to retire, or what I want to do during retirement? Even though we are not able to give you an exact number for your retirement, we can help you figure out what that number should be.

Eliminate Stupid Debt

Since retirement is all about cash flow, the first step is always to eliminate any and all debt. Credit cards may seem like a good deal if you think about the “free” airline miles they offer or the cash-back program. But if you’re spending more than you should and paying interest rates on an outstanding amount, work hard to pay it off, and start buying your own airplane ticket. Using a budget calculator can help you stay on top of your expenses.

Another type of debt to avoid and/or try to eliminate is car loans. Car financing rates are currently very high, but people are still buying financed cars. Car payments can eat up a big chunk of your monthly income and it’s totally unnecessary. 

One more expense we counsel our clients to not have during retirement is a mortgage. Not having that monthly mortgage payment will free up a lot of cash, and will allow you to get closer to having cashflow freedom during retirement.

How can you calculate how much you’ll need for retirement?

To exemplify a rough calculation, we will assume an average monthly spending of $80,000 per year. If a couple makes $200,000 during working years, they would be getting $2,500 each from Social Security. Taking into account inflation and taxes, this couple would need around $600,000 in portfolio investments to cover the rest of their expenses. This calculation is done by taking your guaranteed income and subtracting it from your expenses. Then, take the difference and multiply it by 12, and finally divide that number by 4%. Even though this is a rough theoretical calculation, this is already more comprehensive than an online calculator.

Leave the Planning to the Specialists

Most Americans actually believe that to be ready for retirement they would need around $2M. It is reassuring to know that you don’t need an astronomical amount of money to be able to live comfortably during retirement. However, it is easy to make the math on the back of a napkin and retire tomorrow, but it is hard to remain retired after 10 years because of inflation rate fluctuation. This is why it is so important to have your retirement planning  done by a fiduciary fee-only financial advisor who will be able to bring a much higher accuracy to your plan and adjust it from time to time in order to adapt to different economic conditions.

Download our eBook on “Buyer Beware: Why do they keep trying to sell you that annuity?”


0:00 Intro

06:44 Eliminate Stupid Debt

17:00 How can you calculate how much you’ll need for retirement?

22:45 Leave the Planning to the Specialists


Learn more about Casey Smith, Michaela Laney, Missie Beach, CFP®, CDFA®


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Learn more about A Wiser Retirement™ podcast and access previous episodes.


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