Broker Check

Free Retirement Guide

It's never too soon to start preparing for retirement. But do you know what to look out for? Download our free ebook, "Retire Happy: A Simple Guide to Your Next Big Adventure."

Thank you! Oops!
How Much Will You Need to Retire . . . . Really?

How Much Will You Need to Retire . . . . Really?

September 04, 2023

Reflection on Personal Finance and Retirement Planning

I recently had a birthday. Which is better than the alternative. 😊

One email I received on my birthday included a list of items showing the cost in 1962, the year I was born, and comparing it to the cost in 2023.

 Financial Planner Consultation - Roth IRA Savings Strategies

Turns out, things cost more now than they did when I was little. And that fact is important as you ponder the question of how much money you will need to retire. Things will cost more over the typical 30-year retirement. 

As I talk with clients and friends about this issue, one of my favorite questions is this? “Which cost more, your FIRST house or your LAST car?”

The answer universally is the car. This is just one example of how “normal” expenses can grow to be a surprisingly big number. As a fiduciary financial planner, a big part of my job is helping families who want to make the transition from “working for a living” to “living in retirement” to realistically prepare for what they will NEED to spend during their retirement.

Navigating the Complexities of Retirement Planning

Luckily, the United States economy has grown pretty consistently over the last 100 years and stocks of great companies have typically grown faster than inflation.

Since 1980, the inflation rate has averaged 6.73% according to the U.S. Bureau of Labor Statistics. The S&P 500 index of the 500 largest stocks in the USA has averaged 11.62% with dividends reinvested. So, over the last 43 years, stocks have helped you keep ahead of inflation.

That’s one of the fundamental facts we use to help families build a retirement income machine that will last longer than they do.

But, it’s not as easy as just buying some stocks and taking a nap.

The U.S. stock market is pretty volatile. In fact, as this chart shows, since 1988 the market has averaged 12% annual return AND had an AVERAGE of a 13.25% decline each year. I like to describe the price of the stock market as a yo-yo on an escalator. It goes up and down all the time, but the trend line is relentlessly upward.

Total returns and pullbacks

As an experienced, well-trained CERTIFIED FINANCIAL PLANNER™ professional I help my planning clients prepare for their retirement journey by looking at more than just the stock market. We look at the holistic picture of their financial life. Which includes investments AND so much more. Like:

  1. Cash flow.
  2. Risk protection strategy.
  3. Savings and investing strategy.
  4. Retirement income strategy.
  5. Income tax harmonization strategy.
  6. Estate and legacy planning.

If you would like a better idea of how much money it will take for you to retire, maybe we should visit about it. I would be honored to visit with you. As a fiduciary financial planner, I’m always an advocate for my clients. I love talking with new people. Reach out and we can have a get-acquainted visit. Just follow this LINK to find a time that works for you.

Yes, I am a CERTIFIED FINANCIAL PLANNER™ professional. I’m always a fiduciary and I work on a fee basis. And yes, I’m still taking on a few great families to be part of my financial planning practice.

Dunncreek Advisors does not provide legal or tax advice, nor is this article intended to do so.