Note: Numbers are based on 2022 data.
By Bill Taber
Retirement is a huge life milestone. And, in order to get there, proper planning requires many pieces of your life to come together. You’ll need to consider your living expenses in retirement, estimated healthcare costs, your estate plan, your life expectancy, and more. It’s no wonder people often ask: “How much money will I have when I retire?” and “How much money will I need to retire?”
While there isn’t an exact number or formula that works for everyone, you can carefully plan out your expenses and income streams. Here we'll look at some facts about retirement planning and a few of the basics of investment management (listen to our podcast on the subject for more).
Consider Your Retirement Income Streams
The first thing to consider when estimating the amount of money you’ll have when you retire is what income streams you plan to pull from. Possibilities include:
Social Security
Investment accounts and savings
Pension income*
Royalties and dividends
Inheritances and trust funds
*Keep in mind, many previously ubiquitous retirement income streams like pension plans are not as common as they once were. That’s why your retirement plan will likely look a lot different than your parents’ and/or grandparents’ retirement plans.
When thinking about retirement income streams, don’t forget to consider the tax implications of each. For example, if you invest in a Roth IRA, you pay taxes upfront and future withdrawals in retirement are tax free. Whether your income streams will be taxed in retirement or not will make an impact on your overall wealth.
Don’t Forget About Inflation
There is no getting around inflation, especially for long-term goals like retirement planning. In fact, after months of being told the current inflation crisis is transitory, Federal Reserve Chair Jerome Powell announced that we can expect high inflation to continue into the middle of 2022. (1)
With that being said, be mindful of where you’re keeping your money. Keeping money “under the mattress” isn’t going to get you far. A better strategy is to invest your assets in an investment portfolio that has a higher rate of return than inflation. If your rate of return is less than inflation, you’re losing money—which can hurt your retirement income goals.
It’s Not Too Late to Make Catch-Up Payments
If you’re nearing retirement and you’re worried about not having enough money in retirement, there are opportunities for catch-up contributions, which can potentially increase how much you’ll have in retirement.
Those age 50 and older can make catch-up payments up to $6,500 to their 401(k) plans. (2) And, if you have a Roth IRA, you can contribute the maximum amount of $7,000 a year. (3)
There are also a number of investment strategies and products, such as annuities, that can provide you with a steady stream of income throughout your retirement years. A trusted financial advisor can help make such recommendations.
Plan for Tomorrow Today
You may not know the exact amount of money you’ll have when you retire, but it is possible to make smart financial decisions today to plan out your retirement. We at TABER Asset Management would be happy to discuss your retirement goals and help you make a solid plan for your future. Get started today by scheduling a 15-minute intro phone call online or reaching out to us at 515-557-1860 or invest@taberasset.com.
About Bill
Bill Taber is President and Founder of TABER Asset Management, an independent, fiduciary wealth management firm that strives to do one thing well: manage their clients’ money by creating wealth, building wealth, growing income, and preserving capital so they can experience financial freedom. With more than four decades of experience, Bill is dedicated to building relationships with his clients and their families and walking alongside them as they navigate financial decisions. His favorite days are the ones when he gets to witness the joy and relief on his clients’ faces when they realize they can pursue their dreams and live their ideal lifestyles. Bill is known for going the extra mile, getting things done with integrity, and working with a stewardship mentality.
Bill graduated from the University of Iowa with a bachelor’s degree in business administration and fell in love with the profession when he got to help one of his first clients—his father—turn his lifetime of hard work into a dream retirement. He got his start in the industry as a corporate services representative for Bankers Trust Company and spent decades working as Assistant Vice President of E.F. Hutton & Co. and First Vice President of Principal Financial Securities. He is also a graduate of the E-Myth Worldwide Mastery Business Development Program and is Series 65 registered.
In his spare time, Bill enjoys giving back to his community and served 11 years as a member of the Board of Trustees of Broadlawns Medical Center and 14 years as a Community Representative to their Board Finance Committee. He is also one of the founding members of the Greater Des Moines Connections Mentoring Program. When he’s not working, you can often find Bill spending time with his family and participating in one of his many hobbies, which include traveling to national parks, presidential libraries, and foreign countries; gardening; reading non-fiction; and practicing yoga, Pilates, and meditation. He also loves the simple joys of listening to music, going for walks or bike rides, and watching James Bond 007 films and any movie starring his favorite actress, Meryl Streep. To learn more about Bill, connect with him on LinkedIn.
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