Seriously . . . How Much Do You Really Need?

Each year, I trek over to Sandwich to see my primary care, Dr. Hannah, for a routine visit. After we have a few laughs and solve all the worlds political issues, he checks my blood pressure, weight, cholesterol, and he makes sure my heart’s still ticking. But then life gets busy and I find myself procrastinating, and sometimes I find that it’s been, oh, 15 months or so since my last visit. I know that these visits are important to my continued good health, but I often find myself putting it on the back burner.

As Dr. Hannah’s office called to remind me that I’m overdue for a visit last week . . . I got to thinking.

You know, I find a lot of folks behave the same way when it comes to planning for retirement. Sure, they know it’s important, but there always seems to be something more pressing to do. Maybe they’re investing in a company retirement plan or they have an IRA, but if you ask them what their ultimate retirement savings goal is – and how much retirement income those funds will create – I bet they can’t tell you. In fact, I’ll bet they haven’t actually sat down and determined just how much they will need to retire comfortably, and how to get there. They just don’t seem to have the time – or perhaps they procrastinate because they don’t know how to do this, and the task is too intimidating.

With pensions and Social Security providing less financial security than in the past—coupled with an uncertain economic future—the pressure is on for working Americans to save as much as they can for retirement. Yet numerous recent studies have suggested that, as a nation, we are overwhelmingly unprepared for retirement. While more Americans have retirement accounts today when compared with past decades, that doesn’t necessarily mean everyone is saving enough to live comfortably throughout their later years.

A 2018 Government Accountability Office study found that nearly one-third of Americans age 55 and older don’t have any retirement nest egg or even a traditional pension plan. The study also tells us that many of those who do have retirement funds don’t have enough money.

Folks, while I generally believe that comparing yourself to others isn’t good for your own peace of mind, when it comes to retirement savings, having an idea of what others do can help provide for some good insight. It can be hard to determine how much you’ll need, exactly, for your own post-career days, but finding out how others are planning and what financial experts suggest can offer a starting point for setting your own savings goals.

So how much have others really saved for retirement? A recent 2019 survey by the Transamerica Center for Retirement Studies helps to shed some light on the situation. The study lists the median retirement savings by age in the U.S.:
• Millenials have saved $23,000
• Gen X’ers have saved $66,000
• Baby Boomers have saved $152,000

Hmmm . . . this doesn’t sound like much.

If your retirement savings balance puts you in good company, it probably won’t make for a comfortable retirement. So just how much money do you really need? Some experts will cite the “80 percent rule” of retirement planning, which states that you should plan to live on 80 percent of your pre-retirement income. However, this is just a rule of thumb and not an exact science. Your personal goals—retiring early, owning a second home, leaving a nest egg for your heirs or accommodating health challenges—could mean that your needs require different planning. The unpredictability of economic factors, medical costs and your longevity will also affect your expenses in retirement.

In order to estimate what you need to put away for retirement, you’ll need to consider a number of factors – for example, at what age do you plan to retire? How much debt will you pay off before retirement? What is the cost of living where you plan to retire? What kind of lifestyle do you want to lead? For example, is travel a goal? What is your investment strategy? Do you want to leave money to family members?

Keep in mind that life is unpredictable–economic factors, medical care, and how long you live will impact your retirement expenses. I do recommend that you give yourself a cushion and exceed the average retirement savings. So, if your retirement savings is nowhere near what they should be, this week with our time together let’s discuss some steps you can take to boost your savings before you retire.

First and foremost, look closely at your budget. If saving for retirement is a priority, your budget should reflect this. Retirement savings should be toward the top of your list, along with basics like food, shelter and utilities. Always pay yourself first.

Once the budget is shored up, begin increasing your monthly contributions to max out your 401(k), IRA or other retirement plan. Are you making the most of your employer’s match? How much of your annual salary are you putting away?

Another consideration is to delay your retirement. Ask yourself, how much more could you save by working a few more years? Not only does this maintain your income, but it decreases the number of years you’ll be retired. Or if your current employment is running you dry; another option is finding a part-time job during your retirement.
Make sure to set aside “found” money for retirement. If you receive extra cash from a bonus, gift or tax return, add it to your retirement savings. It is the little things that can make the biggest difference.

Don’t forget about Social Security. You can maximize your Social Security income by waiting until full retirement age or longer to collect your benefits, so evaluate all of your filing options to make sure you’re maximizing this crucial source of income.

Lastly, pay off your debts. Outstanding bills in retirement take away from your available income. Make sure to implement a Debt Mitigation Plan (DMP) which is instrumental to help to lower your debt before you retire.

And folks, above all else, make sure that your investment strategy is properly situated to get you both to and through retirement. This means selecting a mix of investments that not only has the opportunity to grow, but also offers a level of protection so that a market downturn doesn’t decimate all of your hard work. What is your current Downside Risk Mitigation Strategy (DRMS) to help avoid significant loss? Do you have one? Should you? You bet! You must understand the strategy behind your system. If you don’t, well, make sure to seek out a specialist who can help you develop a (DRMS) strategy you deserve.

As with all things unpleasant, whether it be a routine needle poke from the doctor or creating a solid retirement system, procrastinating can actually make the situation worse than it has to be. Facing the task head on (and getting it out of the way) allows us to move on with greater confidence. That nagging feeling that comes from putting something off goes away, and we can then experience a clear vision of what we want to achieve. That vision must guide us as we develop strategies to help us get there. And that’s why my advice is always the same:

Be vigilant and stay alert, because you deserve more!

Have a great week!

Jeff Cutter, CPA/PFS is President of Cutter Financial Group, LLC, an SEC
Registered Investment Advisor with offices in Falmouth, Duxbury, Mansfield & Southlake, TX. Jeff can be reached at

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