Retirement and financial planning can essentially be broken down into three phases:
- Saving
- Investment
- Distribution (Retirement Income)
For many people, that means spending our working years making an income to provide for our families and to save for retirement. We then invest our savings in hopes of achieving a rate of return over time, to grow the assets and provide for our retirement. And finally, we devise strategies to generate retirement income from our savings.
Each phase involves planning, strategy, and in many cases the need for professional advice. That’s what we do here at WrapManager – we help our clients navigate each phase in an effort to reach their long-term financial goals.
Saving is where it all starts. In a survey cited last September in the Washington Post, 71% of Americans said they do not have enough retirement savings. Debt was another issue – according to the Consumer Financial Protection Bureau (CFPB), “more people are entering retirement with more debt than ever, especially mortgage debt. The CFPB says the percentage of homeowners 65 and older with mortgage debt increased from 22 percent in 2001 to 30 percent in 2011.”1
Whether we save or spend is a retirement planning decision that is largely within our control. Often times, devising a solid saving plan just means creating a budget with your financial advisor and committing to a certain amount of savings every month, and sticking to the plan.
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For investors that are still in the saving and investing phase (though in a sense, the investment phase never ends), JP Morgan has created a very insightful table for giving you a rough idea of how ‘on-track’ you are. In the table below, simply find your age and income level, then multiply your income by the corresponding multiplier in the table. According to JP Morgan’s table, a 55-year-old with a household income of $150,000 should have ($150,000 x 7.2) $1,080,000 saved, in order to be considered in good shape for retirement.
Take a look at the table below. Where do you stand?
Are You Behind in Saving? Don’t Worry, Just Take Action!
The table above is not an end-all be-all indication of whether or not you’re on track for a successful retirement. It is based on some reasonable assumptions (but they’re still assumptions), and it does not take into account what your desired retirement goals are and whether or not you may have other sources of income. It does however provide a good starting point for thinking about where you stand.
In order to get a detailed analysis and understanding of how on-track you are for retirement, you should consider your income needs in retirement, your goals, your health and longevity, your other sources of income, and other factors like taxes and estate planning.
Every investor and retiree is different. At WrapManager, we can provide you a customized report that analyzes each of these factors and shows you where you stand, and what changes might make sense to get you where you want to go. To get started with a free analysis of your financial situation, please just reach out to one of our Wealth Managers at 1-800-541-7774, or start a initial conversation with us over email at wealth@wrapmanager.com.
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