Retirement Myth – There is no magic number!

Michelle Bertram and Beverly Bertram are financial advisors living in Mineral Point WI and serving the surrounding communities. Michelle Bertram does financial planning for retirees along with business consulting. Beverly Bertram specializes in retirement planning and income planning for her clients. Michelle Bertram and Beverly Bertram are authors of the book, Creating You DREAM Retirement and creators of the DREAM Retirement Process. Serving Madison WI, Verona WI, Mount Horeb WI, Barneveld WI, Dodgeville WI, Dubuque IA, Platteville WI, Lancaster WI, Cuba City WI, Fennimore WI, Darlington WI, Monroe WI, Spring Green WI, Black Earth WI and beyondHow Much Do I Need To Retire?

This is the million-dollar question! Whether we are on the radio, presenting at a live event or meeting one on one with someone, this question often comes up. If you google this, you find 49 MILLION answers!

The fact is, this, like many retirement questions, does not have a one size fits all answer. I have heard some people say you need a million, yet we have clients with under a million living their DREAM retirement. They are happy and more satisfied then some we know with millions saved. So, that’s not the right answer.

We hear others say you need to replace 80% of your income in retirement and you can plan on withdrawing 4% of your portfolio per year in retirement for income. But some people need to replace 100% of their income in retirement or more if they plan to travel! And while 4% has been a rule of thumb, Michael Finke, Texas Tech University stated in his research that the 4% rule cannot be treated as a safe withdrawal rate in today’s low-interest environment.  So, that’s not the right answer.

The right answer for you is found in a process. First, you have to start with what you want your retirement to look like. What do you want to be doing? Where do you want to live? Do you plan on traveling or fishing at your cabin? You first have to paint your DREAM retirement picture. Then, you need to think about what that will cost to be able to live the way you want.

Next, you have to take a look at your complete financial picture. You need to calculate what you will be receiving from social security (you can do this online at ssa.gov) and other pensions. After that you need to determine how much income you will need to generate from your portfolio and then, you need to find out if your portfolio can sustain that withdrawal amount for retirement. You can use the 4% rule for guidance to determine how much you need in your portfolio or what income you can expect from your current portfolio.

You can try to do this on your own, like finding your way out of a forest with a map and compass, or you can take a guide who has walked with others many times before and let them be your leader.

(Note: The 4% rule is not set in stone, it is important to have an advisor “stress test” your portfolio to see the probability of sustaining that withdrawal rate throughout your retirement. There are various ways to do this, but in the end, you need to know the risks in your plan.)

For more information, to request a copy of our book or sign up for an upcoming Inspiring Women event.