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Between 10,000 and 12,000 Baby Boomers  Retire Every Day

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What's your Retirement Nest Egg Number?

According to a recent study by a large institution, adults aged 18 and older now believe they need $1.46 million in savings to retire comfortably. This figure represents a significant 15% increase from the $1.27 million reported the previous year and a substantial 53% surge from the $951,000 target reported in 2020.

The study continues on to say it’s essential to consider these evolving figures when planning for retirement.  Is it?  Or is there a another approach to planning for retirement that focuses more on the amount of income generated versus the size of your nest egg?

There are some very pragmatic thoughts to consider as you plan to enter into one of the most fulfilling chapters of your life!...

Other Factors Beyond the Size of Your Nest Egg

There are many other factors to consider other than the size of your nest egg, as you plan for retirement.  Often overlooked is that, as you get closer to retirement, the planning for retirement should focus more on the income you can derive from multiple sources.

Your Social Security benefits is the most obvious factor that plays a significant role in your retirement income planning needs.  Often times, Social Security may provide 30-50% of your essential spending needs.  Your benefit may be the only retirement income source that will grow over time with inflation!  Consider maximizing this benefit amount (by timing the age you start collecting) so that you maximize your inflation benefit!

If you are fortunate to have a corporate pension, that income may add another 30% or more to your essential spending needs.  When combined with Social Security, you may be getting 50-80% of your essential spending needs covered by these guaranteed income sources.

There may also be income considerations from a part time job or consulting gig.  In the book "The New Retirementality", Anothony Mitchell describes a number of retirement scenarios that may include part time work not just for the income aspect but also the mental well being as you transition slowly into permanent retirement over time.  I'm finding a lot of clients that subscribe to this mentality as a source of personal fulfillment.

Let's not forget those Required Minimum Distributions (RMDs) that kick in somewhere between your age of 73 to 75, depending on your date of birth.  That income can be added to your retirement income once it kicks in.

For those individuals that still have an income 'gap' to meet the essential needs AND don't want to rely on the nest egg portfolio (subject to ups and downs in the market) for their essential spending, there is the option to turn some portion of the portfolio into a guaranteed income stream.  There are lots of options to consider beyond the scope of this article that can be customized to your personal situation.

Additional Thoughts

When you analyze your specific situation including your essential spending needs and all the available income sources, your overall nest egg requirement may be very different than some of the industry survey averages available online.

For an analysis of your personal situation, contact a Financial Advisor that you pay directly to ensure they work specifically in your best interest and not in the interest of the company they represent or products they sell for a commission.

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