Last month, we spoke about the wisdom of checking how well your existing retirement planning strategy will replace your paycheck once you stop working. In this article, we offer a specific example, of how important this can be. And the time for this review may be now.
Let’s take a look: Mary A, a 52-year-old teacher had been saving $5,000 each year for 25 years. Mary asked Isakov Planning Group to review her retirement savings status and how it would meet her needs after retirement.
After 25 years, she had approximately $786,000 in total assets. Sounds pretty solid, right? When we did the calculations, based on interest of 8%, this amounted to about $5,200 of income per month, which was not enough to support Mary’s desired lifestyle and financial goals in her retirement years.
We made some important adjustments to her plan. By increasing her retirement contribution to $7,000 per year until age 59, with that same 8% annual rate of return, her total asset value has now grown to $1,200,000, more than a twofold increase over only 7 years. At this total, her monthly income would be $8,000.
Typically, teachers, engineers, nurses, policemen, and firefighters work in their primary positions for about 25 years. If they have been diligent in saving for retirement, their retirement savings are often right around the $700,000 mark at that time. That’s the time for them to pause and evaluate how their retirement plan will pan out for them, and what other assets, including a potential pension, may mean for them.
In terms of retirement savings, more important than a preset notion of a retirement date is the total net worth, with which they can replace their paycheck.
At Isakov Planning Group, we want to review the client’s total financial picture, with time remaining before they will start drawing on those retirement savings.
If you are in a profession like Mary, or a similar job with the potential for early retirement, now is the time to check in on your retirement plan. Contact Isakov Planning Group today for a free, no-obligation introductory call.