PLANNING FOR RETIREMENT

Welcome back to the blog! Today, we're diving into a topic that is always a main question for prospects: How much do I need to have saved in order to retire comfortably?

The answer: it depends on the person!! Everyone is different. But, I want to teach you a couple simple planning tools that can help see if you are on the right track.

1. The Rule of 72: This simple rule helps estimate how long it will take for your money to double based on your investment's rate of return. For instance, if your investments average a 7% annual return, your money will double approximately every 10 years. Knowing this can give you a rough idea of your retirement savings trajectory depending on how many years you have until you want to retire.
   

2. The 4% Rule: This rule suggests that you can withdraw 4% of your retirement savings annually without significantly depleting your principal. For example, if you have $1 million saved, you could withdraw $40,000 each year. While this is a conservative estimate, it provides a starting point for planning your retirement income.

You can reverse engineer the 4% rule this way: how much do you live off of every year? Take that number and multiply it by 25 - this would get you the amount you need in your investments in order to retire. Ex: you want $100,000 in income annually in retirement. $100,000 x 25 = $2.5m you need in assets to retire.

Remember - these rules are just helpful ways to project, it doesn't guarantee those results. It is also helpful to do more intensive financial planning that would also include adjusting for inflation as well as planning for those "what-if" scenarios that happen in life.

I hope these help get you started on your retirement planning journey!