Broker Check

How Much Do I Need to Retire?

May 22, 2024

A few years ago, ads from financial services companies asked, "What's your number?" The "number" represented the amount of money you needed to retire comfortably. There are, of course, various approaches to estimating your retirement "number," all of which are influenced by your goals and factors, such as your expected retirement age and the lifestyle you hope to maintain in retirement. So, while this question may have been an effective way to spark conversations about retirement, we believe that it doesn’t paint the complete picture.

Retirement isn't just about reaching a specific monetary goal. It also involves creating a comprehensive strategy that looks to optimize your various savings vehicles, each playing a different role in your retirement income approach. It also means factoring in healthcare costs, thinking about the legacy you wish to leave, and being flexible enough to adapt to life’s unexpected twists and turns. Ultimately, your strategy needs to consider how your assets will work together to fund the retirement you envision.

An essential part of orchestrating your retirement income strategy is determining which assets to take and in which order.

There is no one-size-fits-all answer, but some general guidelines can help when you are starting to think about a withdrawal strategy.

For example, one approach to consider is withdrawing money from taxable accounts first, then tax-deferred, then tax-exempt. By using taxable money first, you can avoid paying taxes as long as possible with tax-deferred investments. And your tax-exempt accounts remain tax-exempt for a longer period. Ultimately, your decision will be influenced by a wide range of other considerations, including withdrawal fees, surrender charges, and other costs that may be associated with each specific account. But when possible, consider using the power of tax deferral and tax exemption to your advantage.

There's a lot to consider, but you don't need to figure this out on your own. This letter is designed to highlight some high-level concepts and is for informational purposes only. It's not a replacement for real-life advice. Your tax, legal, and accounting professionals may also have some additional insights into the tax implications of certain withdrawal decisions.

Regardless of your age or financial position, having a well-thought-out retirement strategy is one of the most critical actions you can take. Having a retirement number in mind is an excellent place to start, but preparing for retirement is a multifaceted process that should factor in healthcare costs, distribution approaches, and estate management.

It's a lot. As financial professionals, we may be able to help. We can help show you how your various investment accounts can work together toward your retirement. If you would like to review your current strategy, please contact our office.

This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm.