Money in, money out.
The idea of balancing the two seems simple enough ... but it's not. In speaking with many of our clients, one thing is clear: It's hard to plan for retirement when dealing with so many unknowns.
How long will I live? How big of a nest egg will I need to live comfortably during my golden years? And, when I begin drawing from my retirement funds, exactly how much money should I take out each year?
Truth be told, there's really no universal answer. Many wealth managers and financial planners adhere to something called the 4% Rule, which suggests annual withdrawals of no more than 4 percent during the retirement years. But, as this article from USA Today suggests, 4 percent is not a magic number. It's simply a starting point.
When we sit down with clients and prospects, we discuss future goals. Our mission: To gain a better understanding about the type of lifestyle they hope to enjoy in retirement. We talk about how a million dollars in assets can produce $40,000 annually under the 4% rule. We also stress that most people's investment horizon is longer than they think. To have a chance at portfolio growth, most accounts are heavily skewed to equities due to today's low interest rate environment.
Presently, the average retirement age in the United States is 62 -- but life expectancy rates are on the rise. A woman who retires at 62 can reasonably assume she'll live another 20 years (or more!). A man will likely live another 14. Naturally, if we're all living longer, we all need to keep our nest eggs reasonably in tact for a greater stretch of time.
Another consideration? A lot of us don't have pension plans, which were a much more reliable 'safety net' for past generations. That's a huge chunk of money that many younger Americans simply won't have access to.
Ultimately, the best advise I can give is to work with a qualified financial advisor who can help you with your individual retirement goals. The Haley & Summers team has more than 47 years of combined market experience.
Jeff
