How Much Money Will You Need to Spend in Retirement?
Have you ever worked with one of those online retirement calculators? You plug in certain information — like your current income and savings, your expected rate of return, maybe an inflation factor — and eventually it tells you how much money you should aim to have in your portfolio at retirement in order to give you the income you need. Here’s the problem – they often give numbers that are far higher than you’ll actually need. If you require, say, $100,000 of income to retire at age 65, will you really need $230,000 per year 30 years later just to keep up with inflation? From our experience, as retirement goes on, spending needs (and thus your income needs) tend to go down over the long term – not up. What this means is that you may not need to have as much socked away in your portfolio as those online calculators would suggest.