Your retirement goal is personal. It depends on when you want to retire, what your expenses look like, how long you live and how much you've saved so far, along with some other things. But, there are also some things about saving for retirement. There are more universal, inflation, stock market risk, rising health care costs, etcetera. In this video, I'll walk through the key components to consider when determining what your retirement might look like, and whether or not you're on track. First up is expenses, how much you'll spend in retirement makes a huge difference as to how much you'll need to save to be able to retire. The more you take out of your portfolio, the bigger your portfolio needs to be to sustain those withdrawals over a long period of time. And withdrawals in the first five years retirement have an especially big impact, on whether or not your portfolio will last for your lifetime. For example, for every $1,000 per month that you spend in retirement. So think future dollars here, not current dollars. You'll likely need about $300,000 in your retirement portfolio on the day you retire. And I want to mention debt here as well, paying off all of your debt by retirement is an excellent goal to shoot for, because enables you to take less out of your portfolio each month since you won't have those debt payments to take care of. You can look at this is you know it this way, for every $100 per month of debt payments that you can eliminate. It's worth about $30,000 portfolio value to you, and for every $1000 per month of debt payments that you can eliminate, it's worth about $300,000 in portfolio value to you at retirement. After expenses, the next key component is taxes. During your career, taxes come out of your paycheck, but in retirement taxes actually come out of your portfolio, and typically your Social Security check as well. So just like expenses, the less you spend on taxes and retirement, means the less you have to take out of your overall portfolio. And that means that your portfolio can last longer. If you have all of your retirement savings and Roth accounts, those dollars can be withdrawn tax free after age 59 a half. While traditional IRA 401(k) and 403(b) money will be taxable just like it was earned in the year that you took it out of your account. Next up is sources of retirement income. This includes Social Security, retirement benefits for those that are eligible and pensions if your employer provides one, as well as some other things like rental income or maybe even part time income. Having more income in retirement means that you can cover more of your expenses from that income, unless your expenses have to be covered from your retirement portfolio. And I'm sure you're noticing a theme here that means that your portfolio can last longer. Let's spend a minute talking about longevity. Longevity is how long you live. Longevity means that you have a longer life, which is awesome. But it also means from a planning perspective, that you don't want to run out of money in your later years of retirement. It's not uncommon to live in your 80s and 90s these days. So planning for the possibility of spending 20 to 30 years in retirement is important. Honestly, longevity is one risk in retirement if you want to call it that. But there are others as well, inflation, which is a rising expenses could be taking out more from your portfolio than you plan. So we're visiting your numbers each year in retirement is key. So that way you can make adjustments as needed. Other risks include market risk, which is the risk that your investment portfolio either loses value or doesn't grow as fast as planned. And long term care risk, which is the possibility that you may need long term care, which isn't covered by typical health insurance and barely covered by Medicare. There's a lot to consider here. And although it's important to keep all of this in mind, it's also important to focus on what you can control, which is the amount of money that you're saving towards retirement each and every month, and how your portfolio is invested. [SOUND]
