PLANNING for retirement may require multiple scenarios to figure out what’s best for you and your family.
Many times, financial planners will lay out a few different options based on factors like money saved, the age you wish to retire, and the quality of life you expect.
While those are all great things to consider, many times folks ask another question.
How much should I save for retirement?
“There is no magic number of how much you need at a certain age because that’s going to depend on how much you wanna spend in retirement and what retirement looks like for you,” said Keith Wilson, financial planner for Wilson Financial Advisors.
Wilson is a financial advisor and has been helping individuals and businesses with financial planning since 1989.
He also has a YouTube channel where he breaks down large concepts like insurance, investing, estate planning, wealth preservation, and retirement.
In a recent video of his YouTube show called That Financial Guy, Wilson answered the question: can you retire at 55 with over $2 million?
MONEY MOVES
Wilson used two examples of fake couples with similar frameworks.
Both were age 55, both had over $2 million saved for retirement, and both wanted to take home $7,000 per month.
While the couples had nearly identical factors, the outcomes were much different.
The first couple had a 38% probability of success while the second had 98%.
Wilson revealed that the main difference in the degree of success comes down to two factors: the amount of money that was in each category and debt.
The first couple had $80,000 in savings, $1.4 million in IRAs, $350,000 in brokerage accounts, and $170,000 in Roth IRAs.
However, they had $15,000 in credit card debt.
Meanwhile, the second couple also had $80,000 in savings, $170,000 in IRAs, $1 million in brokerage accounts, and $750,000 in Roth IRAs.
While the second couple had no debt, the way they allocated their money turned out to be a bit better also.
Wilson said it’s better to have more saved in taxable accounts because taxes, which are capital gains, typically have lower tax rates.
This means that you can wait to withdraw until your required minimum distribution.
MORE SAVINGS TIPS
Planning for your retirement will likely alleviate some concerns about money in your future.
Many experts and financial planners like Troy Sharpe, chief executive officer of Oak Harvest Financial Group, offer tips for your future.
Sharpe shared a few topics to consider when considering retirement planning:
- Investment portfolio assessment
- Income planning
- Tax planning
- Health care planning
- Estate planning
Another couple, 65, had over $4.1m in retirement but an expert shared a little-known tax law that saves nearly $600k when withdrawing.
Plus, see if you know the answer to 13 important questions about Social Security.