How Much Income Will I Need?

Your desired retirement lifestyle will determine how much income you need to generate for a satisfying retirement. Many people underestimate the impact that inflation may have on their expenses going forward, and their health care costs as they age. Health care expenses include out-of-pocket costs, insurance premiums and possible nursing care needs. While it seems counter-intuitive, many retirees see a significant increase in their spending for the first years of their retirement if they travel or enjoy activities they may not have time for while working.

An F&M Trust relationship manager can help you evaluate your specific situation and assist in determining how much you will need in order to retire and live the life you have been working to achieve.

How Much Should I Save for Retirement?

The amount you need to save to fund your retirement income can be substantially reduced after social security and any pension benefits are considered. Most people are aware that individuals may begin receiving retiree social security benefits as early as age 62, or as late as age 70. Determining the best time for a retiree requires a review of multiple factors, and may vary even among spouses. F&M Trust professionals are able to evaluate your situation, and make a recommendation based on your unique needs.

The “income gap” between known social security plus pension benefits, and required income for your retirement lifestyle must be filled with income and assets you have saved during your lifetime. You will want to limit your withdrawals from your assets to roughly 4% or less of their value each year to increase the likelihood of those assets lasting for your lifetime. Using this as a guide, you may need to have saved 20-25 times the amount of the “income gap” in a retirement plan such as an IRA or 401(k).  If you ask retirement specialists how much you should be saving, they typically will tell you “more.” If you ask them when you need to start, they will tell you “yesterday.”


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