How Much Do I Need to Retire Comfortably?

By Brett Gottlieb

“Comfortable” has different definitions for different people. That means that your version of a comfortable retirement is not going to look like your friend’s or neighbor’s. You might be planning to spend your golden years close to your hometown, near family and friends. Or maybe you want to travel the world or move to a warm, sunny climate. Whatever your retirement goals, it’s important to have an idea of how much they will cost you. When figuring out your magic number for your unique retirement, consider the following questions.

What’s Your Ideal Retirement Date?

Your age (now and in retirement) is one of the most significant factors to consider when determining how much money you need to save. If you want to retire early, you’ll have fewer years to save for a longer retirement. And if you start claiming Social Security benefits before full retirement age, you’ll also have to factor in a smaller monthly benefit amount.

The state of the stock market can also play a role in how much money you need and how long your money lasts. A Vanguard study found that you have a 31% higher chance of running out of money if you retire near or during a bear market.^[1] Of course, you have no way of knowing if we’ll be in a bear or bull market when you retire—but this is a scenario you must account for in your retirement planning.

What Do You Want Your Retirement Life to Look Like?

Have you thought about the type of lifestyle you want to have in retirement? If you know you want to travel, play golf, or spend time with your grandkids, you need to factor in what that looks like and how much it will cost.

For example, if you plan to travel, you’ll need to consider:

Will you be traveling stateside or internationally?
How often do you want to travel?
How would you like to get there? (e.g., car, plane, or RV)
Where would you like to stay? (e.g., 5-star hotel, Airbnb, with family members)
Will you be traveling with your family? Would you like to cover their expenses too?
Will you maintain your primary residence? If so, who will watch your house and maintain it while you’re gone?

Even if your dream is simply to spend time with your grandkids, you’ll still need to think through your expectations and expenses. To some people, “spending time with grandkids” means babysitting a few times a week. To others, it means footing the bill for all-expenses-paid trips to various destinations of their choosing. Whatever it is you want to do with your time, map out the details so you can have a clear picture of how much you’ll need to make it a reality.

Will You Earn an Income in Retirement?

Working during your retirement is a great way to stay active, keep your mind sharp, and maintain a sense of purpose. Some retirees choose to build a second career through consulting. Others decide to pick up a low-stress, part-time job at a family office or retail store.

How Much Debt Do You Carry?

Bringing debt into retirement has two major drawbacks:

It reduces the amount of cash flow you have for housing, travel, hobbies, and other non-essential purchases.
It can potentially drain your retirement savings quicker, which means you may run out of money or have to adjust your lifestyle down the road.

If you carry debt, take a close look at what you owe and figure out how much cash flow you’ll need in retirement to cover these expenses. Some people prefer to pay off any high-interest consumer debt before they retire. Others will take it one step further by paying down their mortgage and auto loans too.

What Kind of Healthcare Coverage Do You Expect to Have?

Right now, you most likely have health insurance through your employer. When you stop working, you’ll need to have a plan for healthcare coverage another way. You may be able to hop on your spouse’s plan, if he or she is still working. Or you can get coverage through the healthcare marketplace. You qualify for Medicare starting at age 65, but even then, you may want additional coverage to pay for prescription drugs, dental care, eye exams, and other expenses.

Retirees sometimes fail to fully plan for expenses during the later stages of retirement, and medical care often tops the list. It’s estimated that retirees will use 15% of their income for health expenses, and the average retired couple could see healthcare expenses of approximately $300,000 after age 65.^[2] Don’t let this be a planning oversight that prevents you from retiring comfortably!

Will You Have Any Dependents?

Your kids may be grown and out of the house by the time you retire, but that doesn’t necessarily mean you’ll stop supporting them financially. Over 79% of parents said they still give financial support to their adult children (ages 18 to 34), according to a Merrill Lynch study.^[3]

And even if you aren’t helping your kids out with daily expenses, you may want to contribute to their weddings or down payments on home purchases down the road.

Where Will You Live?

Housing may be your biggest expense in retirement. And even if your home is paid off, you might want to consider downsizing to a smaller place that requires less maintenance and has cheaper utility costs.

To save even more, you can think about relocating to an area that has an overall lower cost of living. For example, the cost of living in Carlsbad, CA, is 91.7% higher than the national U.S. average.^[4] But move just about 15 miles east to San Marcos, CA, and the cost of living drops to 54.4% above the U.S. average!^[5]

What Is Your Family’s Health History?

The average 65-year-old man has a 35% chance of living until age 90; that rate goes up to 46% for a woman the same age.^[6] And while life expectancy is unpredictable, if your family has a strong history of living to age 90 and beyond, your chances may be even greater than these odds. In this case, you’ll need to determine if your planned retirement savings will last long enough.

Similarly, if you have known health conditions and/or a family history of health problems that could affect your life span, you’ll want to consider this too.

Your Unique Retirement Needs a Unique Plan

If only figuring out how much you need for a comfortable retirement were as simple as a quick Google search! On the contrary, to apply to your unique situation, your magic number requires a deep dive into your financial situation, family history, and goals.

We at Comprehensive Advisor strive to simplify financial management while prioritizing the understanding of your unique needs—all while inspiring you to be more confident in your financial decisions, including helping you to figure out how much you need to save for retirement. Share your anxieties with us; we’ll help protect your wealth while you live within a personalized retirement plan.

If you’d like to partner with a financial planner who can help you find the right balance between enjoying life and safeguarding your nest egg, email us at info@ComprehensiveAdvisor.com or call (760) 813-2125.

About Our Advisors

Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees in Business Administration and Economics. Brett is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.

With a combined experience of over three decades in the financial services industry, our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial solutions for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a retirement road map to help ensure their assets are protected and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.

Comprehensive Advisor, LLC is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through AE Wealth Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Comprehensive Advisor are not affiliated companies. C.A. Financial & Insurance Services, CA Ins. Lic. #6000262. This material is intended to provide general information and is believed to be reliable, but accuracy and completeness cannot be guaranteed. Neither the firm nor its representatives may give tax or legal advice. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income, etc. generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. 1299233 – 4/22

^[1] https://hermoney.com/invest/retirement/retiring-into-a-bear-market-this-one-move-will-help-you-survive-it/#:~:text=Recent%20research%20from%20Vanguard%20shows,two%20year%20different%20retirement%20date

^[2] https://www.fidelity.com/viewpoints/personal-finance/plan-for-rising-health-care-costs

^[3] https://mlaem.fs.ml.com/content/dam/ml/registration/ml_parentstudybrochure.pdf

^[4] https://www.bestplaces.net/cost_of_living/city/california/carlsbad

^[5] https://www.bestplaces.net/cost_of_living/city/california/san_marcos

^[6] https://www.rate.com/research/news/retirement-expectancy#:~:text=Age%2090%20isn’t%20some,woman%20the%20 odds%20are%2046%25