It’s the question every Financial Planner has been asked, countless times—How much money do I need to retire?

Unfortunately, this question needs to come with a lot of additional information to answer. There are a range of factors which will impact how much money you will need in retirement and the answer will vary from person to person.

When planning for retirement, these are the questions you need to ask yourself

When will I retire?

The age you intend to retire at will impact the amount of money you will need.  If you plan to retire at 60, you will need more assets available to fund your retirement than if you were to retire at age 70.

How much will I spend per year?

The first step to addressing this is to consider your annual, fixed expenses such as bills, insurance, rates and groceries. All of these expenses will continue into your retirement. Also consider your discretionary spending. Do you anticipate this to increase or decrease after you exit the workforce?

How will I spend my retirement?

Consider how you envision spending your retirement. Do you see yourself on a yacht in Greece or do you picture yourself at home with the grandkids? If you would like to do things like travel during your retirement, this will require more funds.

What if my circumstances change?

When planning for retirement, your plans will change. For example, you may have to leave the workforce earlier than anticipated due to unforced illness or injury, familial dynamics may change or there may be a significant economic crisis. These are just some of the factors which impact people’s timeline for retirement.

So what can you do to mitigate these circumstances? When it comes to unexpected illness, injury or death of a spouse, this is where having the right kind of insurance and the right level of insurance will come into play. The right insurance will ensure that you are covered should the unexpected happen.

Consulting with a Financial Advisor on an annual or regular basis is also a good way to help mitigate risk. With regular check-ins, you can tweak your strategy as needed and be confident that you are on the right track.

The best way to effectively plan for retirement is to get started as early as possible. This will give you the most amount of time to accumulate wealth and see the full benefits of long-term compound interest. For more detailed information about how to effectively plan for retirement, contact our Financial Planning team.