THE ANSWER?
Retirement Needs Reality Check…
In reality, how much you have saved, in and of itself, cannot determine if you’re ready to retire.
So, this is really the wrong question. That’s because retirement is a cash flow problem, not a balance sheet problem. This question focuses on your balance sheet. The number of variables that affect whether your savings is sufficient for your retirement is far too numerous to list.
Instead, the more appropriate questions are:
- How much income do you need each month (or year) to live comfortably?
- What sources of income do you have?
- What are the features/characteristics of each of those sources? (i.e., guaranteed, stable, variable, inflation-adjusted, spousal continuation, taxation, etc.)
- How does each source affect the others?
- What are your other, non-income objectives? (leaving a financial legacy, providing for others, buying a second home, travel, providing for skilled care down the road, etc.)
- How long do you/your spouse plan to live?
As you can see, breaking down retirement readiness into such a simple question is not only misleading, it can be downright deceiving. Anyone who suggests there’s a “number” is either clueless or making a ton of assumptions that we wouldn’t want to rely on.