#retirement-planning

#retirement-planning

A retired couple living on $6,200 monthly ($74,400 annually) with average Social Security benefits of $2,071 each (totaling $4,142) withdraws approximately $2,058 from their portfolio to cover the gap. That suggests a nest egg around $617,000 using the 4% withdrawal rule. The challenge isn't whether this works today-it's whether it still works in year 15 or 20. At 3% annual inflation, that $6,200 monthly budget needs to become $8,333 in 10 years and $11,180 in 20 years just to maintain the same lifestyle.

Arguably, the most important consideration here is that when you turn 60, you have to think through the idea that you want your money to last for at least 25-30 years. In other words, how you structure your portfolio is more than just how to generate income, it's also how to maintain purchasing power as costs rise because of inflation.

This is basically a strategy of taking all of the investments you have and withdrawing 4% of the balance during your first year of retirement. After the first year of retirement, you now adjust the dollar amount to withdraw based on inflation. The prevailing idea is that if you follow the 4% strategy, you are not likely to outlive your money for at least 30 years, which is often longer than most people live during retirement.

Hard-earned funds are getting more and more squeezed, and that must be a cause for concern. People who have done the right thing-saved consistently and planned carefully-are finding that their money simply doesn't stretch as far as they expected.

Corporate America is facing a silver tsunami - and some companies are better prepared than others. Walmart is redesigning jobs to keep older workers on the payroll. Microsoft is offering what it calls "wraparound care" to support healthy aging. Google is coaching its employees to prepare for retirement. Some smaller companies have introduced chief longevity officers to help workers navigate health, wellness, and the transition into retirement.

That way you can take full advantage of compound interest. Unfortunately, the longer you wait to get serious about saving and retirement, you begin to lose out on the power of compound interest. "Let's say you had $5,000 in a savings account that earns 5% in annual interest. In year one, you'd earn $250, giving you a new balance of $5,250. In year two, you would earn 5% or $262.50 on the larger balance of $5,250, giving you a new balance of $5,512.50."

According to the Employee Benefit Research Institute , more than 50% of Americans have less than $10,000 saved for retirement. This is a big concern, especially considering how shocking it is that a much smaller number have more than $500,000 tucked away for retirement. When you look at the data breakdown provided by the research, there is no question that it will shock people of all income and savings levels.

Northwestern Mutual's 2024 Planning and Progress study revealed the simple step that Americans have taken to double their retirement savings. According to the research, those who work with a financial advisor have around twice the retirement investment account balances compared to people who try to manage their retirement investing all on their own with no professional advice. The research showed that those who have a financial advisor guiding them have around $132,000 in retirement savings, compared with $62,000 among those with no advisor.

Retirement doesn't have to be location-dependent. In fact, some retirees ditch a permanent home altogether. Instead, they're embracing the "digital nomad" lifestyle, which allows them to go abroad to countries where the strength of the U.S. dollar lets them live a more luxurious lifestyle, or travel to places that have been on their bucket lists. This retirement model can look different from one retiree to the next.

Most people would probably be thrilled to reach the age of 50 with $3 million and a $1 million house. But this Reddit poster is having doubts about how well they're actually doing. And while that might seem surprising, the reality is that $3 million doesn't automatically guarantee financial freedom in today's economy, not when rising costs, longer lifespans, and shifting expectations can make even a large nest egg feel surprisingly fragile.

Whether you're already retired or planning for one, investing in retirement will require a balance of strategies that ensure income for the short term and long term. If you invest in the right types of exchange-traded funds (ETFs), you can build a diversified portfolio that ensures steady passive income and capital growth. With hundreds of ETFs in the market today, you need to be careful when you're picking one.

Downsizing has become a dirty word. It conjures up stereotypes of older people "rambling around" sprawling suburban homes being "forced" into a bungalow or apartment far from everyone they know, or relegated into a timber cabin at the end of a garden they tended to for decades so their adult kids can take over the family home.

There is no single answer to the question, "What should I do when I retire?" Retirement offers a chance to reinvent your life and pursue new passions, allowing you to redefine your lifestyle. While I'm not an attorney, given my all-consuming and rewarding working lifestyle, I am also contemplating redefining my life for retirement, so that I can enjoy my time before my "best before date."

A payout worth several million dollars can tempt anyone, but experts say it is important to compare guaranteed income with potential investment results before deciding. Financial planners often point out that lump sums offer flexibility, control, and the ability to leave remaining funds to heirs. However, they also come with risk. Managing a large investment requires discipline, steady returns, and a clear understanding of how long the money needs to last.

Most people would probably be thrilled to reach the age of 50 with $3 million in investments and a $1 million home. On paper, it sounds like the definition of financial comfort. But for this Reddit poster, the numbers aren't translating into the sense of security they expected. Instead of feeling proud or relaxed, they're second-guessing whether they're anywhere close to "doing well."

Whether you're set to retire in 2026 or moving into your soon-to-be-retired years, there is undoubtedly a question of how to best manage your money so it lasts (and lasts) and allows you to enjoy a life of comfort with vacations, dining out, and plenty of happy memories. Of course, for a retiree (or soon-to-be retiree) to get to this point, it requires a pretty simple question of how to handle money management in one's later years.