One of the most common questions we get from our clients is, “How much do I need to save to retire?”
To answer this question, we recommend focusing first on a few mostly non-financial questions designed to help you picture what “retirement” means to you. Starting with these questions can help make the financial planning process less intimidating and more fun and fruitful, too. Below are a few examples:
1. Have you considered a “second act” career in retirement?
According to a recent Charles Schwab survey, more than 40% of people within five years of retirement said they want to continue working in retirement.* Whether you’re scaling back hours at your current job, planning to kick off a new career or pursuing a passion project, finding your “second act” has some tangible advantages when it comes to retirement planning. Along with the benefits of staying active, by continuing to earn a paycheck you mitigate the need to deplete existing savings.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
2. Would you rather take “mini-retirements” and postpone long-term retirement?
While most people still envision retirement as a point later in life when they stop working altogether, the idea of taking time off from work for extended periods — to travel, raise a family or simply take a break — at various life milestones is becoming more common. If this sounds appealing, it will require some diligent planning and saving along the way and will impact the way you think about saving for a traditional retirement down the road.
3. How important is it to leave a financial legacy?
For some clients, an important goal is to leave money to family, friends or a charity after they pass, which of course impacts how you might plan for and spend during retirement. Estate planning isn’t just for the ultra-wealthy — most people should create a basic estate plan, including a will that outlines how you would like your assets to be distributed.
4. Do you and your spouse or partner have the same retirement lifestyle vision?
If you are in a relationship, it’s a good idea to get on the same page when it comes to retirement. Do you want to be active? Are you planning to stay in your current home or retire elsewhere?
Getting at the heart of what retirement means to you is a crucial step toward figuring out the nitty gritty of how much to save to meet your retirement goals. Once you’ve started to outline a picture of what your retirement might look like, a financial adviser can help you put pen to paper on a plan to achieve those goals. If you’re nearing retirement, an adviser also can work with you to create a retirement income plan, including guidance to help you:
- Review your investments to ensure they’re aligned with your tolerance for risk.
- Determine how much to withdraw on an annual or monthly basis.
- Learn about products and services designed to help manage and deliver retirement income.
Ready to get started? The questions above cover some key topics and if you’re ready for more, we compiled about 50 questions into a complimentary card game called “The Next Chapter,”which you can order at https://content.schwab.com/thenextchapter/. (For more on the game, including 20 questions to ponder, read Play the Retirement Flash Card Game.) It has a mix of practical questions like those above and some fun ones like “If you could take one snapshot of your family life and keep it in a frame beside your bed, what would it be?” to help you prioritize what’s important to you and visualize your future. Answer as many as feel relevant and helpful to you. To “win,” the most important thing to do is to take the first step and get started!
See Also: 4 Ways Claiming Social Security Benefits Early Could Work for You
*August 2019 survey of approximately 500 Americans within five years of expected retirement conducted by Charles Schwab.
Investing involves risk, including loss of principal. The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.
The information provided is not intended to be a substitute for specific individualized tax, legal or investment planning advice. Where specific advice is necessary or appropriate, Schwab recommends that you consult with a qualified tax advisor, CPA, financial planner or investment manager.
Charles Schwab & Co., Inc. Member SIPC.
(0220-0PGD)
-
How to Break Free From the 'One More Year' Trap and Actually RetireDespite having more than enough money to retire, some people simply cannot leave their jobs.
-
Stocks Swing Lower as Eli Lilly, Fortinet Spiral: Stock Market TodayThe main indexes finished well off their session highs after a disappointing batch of corporate earnings reports.
-
Five Things to Do if You're Forced Into Early Retirement (and How to Reset and Recover)Developing a solid retirement plan — before a layoff — can help you to adapt to unexpected changes in your timeline. Once the initial panic eases, you can confidently reimagine what's next.
-
Five Ways to Adapt Your Charitable Giving Strategy in a Changing World: An Expert GuideEconomic uncertainty, global events and increasing wealth are shaping the charitable landscape this year. Here are the philanthropic trends and some tips that could help affluent donors optimize their impact.
-
I'm an Estate Planning Attorney: These Are the Two Legal Documents Everyone Should HaveEvery adult should have a health care proxy and power of attorney — they save loved ones time, money and stress if a sudden illness or injury leaves you incapacitated.
-
I'm a Financial Professional: Here's My Investing Playbook for Political UncertaintyFor successful long-term investing in a politically charged environment, investors should focus on economic data, have a diversified portfolio and resist reacting to daily headlines.
-
The Truth About the Dark Side of Rooftop Solar PanelsRampant bankruptcies in the solar panel industry have left many consumers with systems that don't work and no way to get them fixed. Worse, they're being hounded to keep paying despite not receiving what they were promised. What can they do?
-
Six Big Beautiful Opportunities: Advisers' Guide to Tax and Client StrategiesHere are several ways financial professionals can help their clients maximize opportunities in the One Big Beautiful Bill Act, which extends key TCJA provisions, introduces increased deductions for people 65 and older and more.
-
Five Ways to Maintain Charitable Giving During Volatile Times: A Giver's GuideWhen the economic outlook is uncertain, charitable giving is even more important — and impactful. You can be strategic by using donor-advised funds, diversifying assets and prioritizing unrestricted gifts.
-
Avoid Medicare's 'Shadow Tax' With This Financial Expert's IRMAA-Busting TipsYou're cruising along in retirement, and then bam: Your Medicare premiums soar because your income crossed the limit. Take a breath. There could be a solution.
