According to a 2023 survey from the American Advisors Group, 38% of U.S. adults think they’ll need less than $250,000 to retire comfortably — while 25% believe they’ll need over $1 million. This clear lack of consensus adds complexity to an already daunting question: “Am I saving enough for retirement?”
Because everyone’s goals for their golden years are different, it’s important to plan your investment strategy based on your own, unique lifestyle. To help you gauge your retirement preparedness, consider asking yourself the following six questions:
Is it more important for me to maximize my lifestyle now or save for my family’s future?
Balancing personal enjoyment and providing for loved ones is a common concern for many individuals approaching retirement. While saving provides a safety net for unexpected events, there are instances when personal spending is justified, such as:
- Investing in your health.
- Purchasing a long-awaited item, such as a house or car.
- Seeking professional financial guidance.
- Growing your wealth in the stock market.
Striking the right balance is key, and thoughtful investment management and financial life planning can potentially help you achieve personal fulfillment while also securing your long-term legacy.
Am I planning a big purchase soon?
Are you finally purchasing the quaint lakeside cabin you’ve always dreamed of, or buying tickets to an exotic island on your bucket list?
Such big-ticket expenses can be the cherries on top of your retirement cake, but they require careful financial planning. To determine whether your retirement savings are sufficient to accommodate these dreams, start by identifying your desired purchases and estimating their costs. Be realistic with your financial advisor throughout this process, as no one understands your plans for merging current income and savings with long-term goals better than you do. Your future could depend on it.
Do I prefer to stay home or enjoy the finer things in life?
Whether your ideal life involves growing tomatoes in your backyard garden and baking homemade bread, or savoring gourmet meals at five-star restaurants in France, it’s your vision that matters. Align your retirement plans with your personal desires to help determine whether your financial resources will be able to sustain the lifestyle you love before taking permanent PTO. There’s no better time to live luxuriously than during retirement — and the same goes for living “off the grid” — but whatever you choose, it’s essential to plan accordingly.
Do I have enough cash funds saved?
Unexpected expenses can arise at any time, especially during retirement. The reality is that predicting when your or your spouse’s health will decline, or when your car will break down, is challenging. Likewise, it’s difficult to anticipate your child’s wedding or when your friends might invite you to an impromptu 60th birthday party in the Bahamas.
Therefore, it’s vital to have a separate fund for emergencies — as well as last-minute fun — consisting of 3 to 6 months’ worth of essential expenses, readily available. This safety net can help to handle unforeseen circumstances without depleting your retirement savings or incurring debt.
Would I be open to working a part-time job during retirement?
Retirement doesn’t necessarily mean complete withdrawal from the workforce. Many retirees find a second wind, taking on part-time jobs or hobbies that generate income. It could be anything from selling your handmade pottery at a local market or teaching piano lessons at a community center, to working at a golf pro shop and enjoying a discounted daily round. Whatever your interest, there’s a high chance it could bring you a worthwhile income along with personal gratification.
If you have the desire and ability to continue working in a capacity that brings joy, it can contribute to both your financial security and overall fulfillment during retirement.
Do I prefer taking risks or staying conservative?
Investment decisions can play a crucial role in your retirement planning, which is why it’s important to consider your risk tolerance in tandem with your financial goals — especially when determining your ratio of stocks versus bonds.
In general, stocks offer greater potential for high returns, but they also come with increased market volatility. Bonds, on the other hand, generally provide stability with lower returns. So, are you inclined to sell your stocks as soon as you see fluctuation, or are you prepared to ride the market tides knowing the potential for long-term benefits?
Diversifying your investment portfolio based on your risk profile might be the best game plan, since it can potentially help mitigate losses while capitalizing on growth opportunities. Equipped with extensive expertise in trading, timing and trends, your trusted financial professional should have an understanding of what’s most important to you.
They should also have the knowledge and tools to understand what’s needed for you to attain the financial freedom you desire. More importantly, they should have the wisdom to initiate a strategic conversation when you’re falling short of reaching that goal, or to discuss possibilities if you’re on track.
Heintz Wealth Management Can Help You Plan for the Journey
At Heintz Wealth Management, we’re committed to helping you craft a fulfilling retirement plan — one that not only provides for your financial needs, but also resonates with your lifestyle aspirations.
Explore how our financial life planning and investment management services can help you develop sensitive, practical strategies that put your future and your family first.
