Retirement Planning: What are the Variables?

The most commonly asked question about retirement planning is this: How much do I need to save for retirement?

And the answer we always give is simply this: Well, it depends.

That may seem like a copout, but it happens to be true. There is no set figure, no across-the-board amount that works for everyone. Everyone’s retirement is different, and everyone’s retirement costs are different.

Knowable Variables

The amount of money you need to save for retirement really does depend, and what it depends on is the kind of retirement lifestyle you plan to lead. Here, there are several variables that you need to take into consideration—including:

Where will you live? The cost of living varies wildly from, say, Los Angeles to the backwoods of South Carolina. Taxes are different, food and gas expenses are different, property taxes are different, and so on. Additionally, whether you live in a larger house or a smaller home—a home that’s fully paid for or one in which you only have a small amount of equity—is obviously a factor.

What hobbies will you have? Will you need to pay for golf club membership and equipment? Frequent travel expenses? Upkeep of a boat or an RV?

What kind of legacy do you plan to leave for your family? Or to put it another way, how much will you want to set aside for your estate?

Unknowable Variables and Matters of Planning

Those variables you can assess before you retire—not arriving at specific amounts, perhaps, but at least getting some ballpark figures. For instance, you can start playing golf before you retire and get a good feel for how much you will really want to invest in it post-retirement. You can talk with your spouse about future travel plans and make some rudimentary budgets.

It should be said that some variables are tough to plan for. What kind of healthcare costs will you have? Nobody can say for sure, and frankly, it’s best to plan for the worst case scenario. The value of your portfolio is also difficult to appraise, as markets can obviously change and become tumultuous over time.

For those planning retirement, it’s best to speculate and budget where you can while acknowledging that flexibility is key. Your retirement costs will depend on a number of factors, and the only way to cover all your bases is to work regularly with your Stonepath Wealth Management financial planner, ensuring you have a good overall approach to your financial future—one that can stand up to any potential variables.