The natural question in retirement planning that you want to ask is, “How much is enough?” Especially here in Orange County. How can you ensure that you have put enough away to safely retire in the place that you love to live?
The answer depends on a lot of factors, including where we are in life, and our goals for retirement.
Let’s think about the question in another way: How much do you need, in multiples of annual income, to have adequate retirement funds? There are a variety of models out there. A variety of other financial professionals have proposed 8—that’s 8 times a person’s annual income, or $480,000 for a $60,000-a-year household (personally, and from experience, I still find this figure pretty conservative). Still other models give figures like 11 times, or even 25 times the household’s yearly earnings.
So as you see, there is just no easy answer to this good-natured question. We’ve got a truck-load of variables to take into account, because you and the person living in the house next door are completely different people; you and your spouse are different people; and yes, even you in your 40s, you in your 50s, and you in your retirement years are likely to be considerably different people. This is why my staff and I monitor our clients’ accounts so much!
Still, here are four take-away suggestions for retirement savings.
1. Putting away 10% of your earnings for retirement is a good start, but likely not enough. Rather, aim for 15-18% annually.
2. Cultivate a mindset where you acknowledge the positive results of delayed gratification. Every extra dollar that goes into your retirement account will end up being much more than a dollar—not spiritually or emotionally, but mathematically.
3. Without some return on our savings, we’ll likely be in trouble when it comes time to retire. Aim for equity investments where the objective is to gain at least a 7% return. And keep in mind an average inflation figure of 3.5%.
4. Start saving now! Having a comfortable retirement works well if your savings plan is adhered to for 25 years.
Schedule a portfolio review with Miramontes Capital today to discuss how we can help you achieve your meaningful life through retirement planning.