Your Magic Number?

What is your magic number for retirement?  We as a society are taught to fixate on wealth accumulation.  But accumulating wealth is a really small part of the overall equation.  What do you need with these savings once you have reached retirement?  After all these years of saving a percentage of your income and squirreling away funds for the future, the real goal, is to convert those funds into livable, ongoing income for your retirement.  Many financial planners don’t place a great deal of focus on this stage of life. 

On the day you retire all the rules change!  You are spending assets rather than accumulating them.  Even if you save up to your accumulation goal, or your “magic number”, you still run the risk of squandering it away withdrawing it too quickly.

What is the right amount to withdraw from your retirement?   Met Life released a study that said 43% of all baby boomers believe they can take out 10% or more from their savings once they have retired.  You do that and you will run out of money very quickly!  So, what do you think is a safe number in terms of a withdrawal percentage for your portfolio?  If you think it is 5%, that number is still too high, even a 4% withdrawal rate, a rate that was considered safe for many years, is no longer safe. 

What is a safe rate now?  Morningstar and independent investment analysis firm says the right number is 2.8%.  That means if you want 28,000k of retirement income you will need 1million dollars!  And it is taxed on top of that. 

The success of your retirement depends on the answer to 2 simple questions:

  1. How much guaranteed lifetime income do you have?
  2. Have you taken the key retirement risks off the table?

Study after study after study shows happiness in retirement is tied almost 100% to guaranteed lifetime income.   If you have not planned for this there is still time to optimize your retirement.  

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