How Much Money Do You Need to Retire?

“How much do I need to retire?”

It’s a question that’s on everybody’s mind - and, like most things in the world of personal finance, there aren’t any true “cookie cutter” answers out there. You can follow a few rules of thumb, these are really just starting points that open up a longer, more involved retirement planning conversation:

What do you want your retirement to look like?

Just a few years ago, a MarketWatch survey showed that a large percentage of people weren’t all that satisfied with retirement. In fact, only 48.6% of retirees would call their retirement experience, “Very Satisfying,” which is a record low. To combat the fear of a dissatisfying retirement, many pre-retirees are working toward bigger savings goals.

But saving more isn’t necessarily the right solution. Throwing more money at the problem doesn’t equal a satisfying retirement. Instead of trying to bulk up your retirement savings, focus on your values first.

Write a List of Goals

The first step in building the retirement you want is getting clear on what you want. We no longer live in a world where retirement has to mean flying to Florida six months out of the year, or spending all of your time golfing (although for me, that might be the perfect way to spend retirement). More and more retirees are starting a secondary career, building businesses, founding non-profits, travelling the world, picking up a new hobby, or leading volunteer work teams.

There are so many options available to you, that you shouldn’t feel limited by “traditional” ways to spend retirement. Dig deep - what have you always wanted to do? Do you have any bucket list experiences you haven’t accomplished? Do you want to spend more time with friends or family?

Whatever your goals are, they’re the “right” ones because they’re uniquely yours. Don’t judge them against someone else’s. Find goals that are deeply rooted in your values and beliefs, and imagine what life as a retiree could look like if you were living in alignment with your goals.

Work Backwards to Reach Your Number

If you’ve been setting pie-in-the-sky retirement savings goals based on loose retirement expense calculations or automated online calculators, you probably won’t have an accurate idea of how much you need. Instead, follow this system: price out your biggest retirement goals that are based in what’s valuable to you personally. Build a retirement budget around them. Calculate how much you’ll need to save in order to achieve those goals.

Having a retirement budget can help you maximize cash flow and accomplish your values-based retirement goals - without running out of money in a few years. Retirement budgets also help you to gain a big-picture view of how much you’ll need to save before you retire.

Adjust Your Budget As Needed

If you’re looking at the list of everything you want to accomplish in retirement and something is too expensive, either adjust your savings goal or find a way to cut other expenses during retirement. For example, you could downsize your home if travelling was an integral piece of your retirement puzzle. Or you could work to save more before you retire if founding a scholarship at your alma mater is something that is important to you.

Just as you’ve made financial sacrifices in your pre-retirement life, it may be true that you need to prioritize your values and goals during retirement and build a budget that reflects those priorities.

Value-Based Retirement Planning Leads to a Fulfilling Retirement

Saving more isn’t the answer to living a fulfilling retirement. Building a retirement plan that incorporates what you value most in life, and creating a budget and savings plan that addresses those values, is. Many people get stuck trying to live retirement by someone else’s rules. They spend money on things that don’t make them happy, and they spend their time on activities that don’t line up with what matters most to them.

You’ve worked hard to reach retirement, and you deserve to live it in a way that leaves you feeling fulfilled. Right now, you may view retirement as an extended vacation - but it’s so much more than that. Retirement is a new phase of your life that’s going to last a long time. Don’t fall into the trap of measuring your retirement savings against generic numbers and lifestyle goals. Build something that’s going to leave you feeling like you’re living the life you’ve always wanted to live.

Need Help?

Quarry Hill Advisors would love to help you build a retirement budget and savings plan that encompasses all of your unique goals. Contact us today to learn more about how we work, and how we can help you get on the path to a fulfilling retirement.