You’re not alone in wondering how much you need to save for a comfortable retirement. After all, you’ve worked hard to reach this milestone, and there’s peace of mind in knowing you’ve taken all the right steps. But is there a magic number everyone should aim for?

In this week’s Money Wisdom Question Series, Ian Fergusson, RICP® explains that the right amount depends on your individual goals, lifestyle, and financial needs in retirement.

Identifying Your Expenses

Before you can answer how much you need to save, you first need to figure out how much you’re spending. By understanding how much goes out every month or every year, you can better determine how much to save in your portfolio. Beyond that, it’s important to consider the type of investment strategy and portfolio allocation that best fits your overall financial situation.

Understanding Your Personal Situation

Your unique retirement number is based on your individual spending habits, savings goals, and lifestyle needs. Whether you’re reviewing an existing financial plan or creating a new one, these are important income planning conversations to have with a financial professional.

At Johnson Brunetti, we view these ongoing discussions as a necessary part of our fiduciary responsibility. We gather all the relevant information to help ensure your investment strategy aligns with your long-term goals.

Weighing Different Factors

As financial advisors, we have specialized tools that help estimate how much you need to save, based on your expected spending. We can factor in a wide range of variables, including inflation, projected returns on different investment accounts, and performance across various financial vehicles, to create a realistic plan.

It’s not just about averaging your current expenses, dividing by 12, and hoping that will sustain you in retirement. Inflation and long-term financial trends can dramatically reshape your expenses over the next 5 to 15 years, and beyond. As part of our ongoing relationship, we regularly revisit these conversations and adjust your financial plan as needed.