Nearly every person we speak with for the first time wants to know how well they’re doing. It’s natural to want to compare yourself with other people because that’s the easiest way to measure performance.
But financial planning is all about individual needs. That’s what we want to spend time discussing on this episode of the Money Wisdom podcast. We received a question from a listener that felt like they were falling behind because their bank account wasn’t as large as friends and family. We understand the concern and it’s good to be in tune with your financial future, but how do you know if you’re actually in trouble?
The first thing you want to do is find out how much income you want and need in retirement. From there you can back into the correct number. You never want to compare yourself to other people because it won’t give you an accurate assessment. What your friend in San Francisco has saved should be significantly different than what you’d need living in Topeka, Kansas. It’s all about determining what your savings amount should be to give you the retirement you want.
But for the sake of the discussion, let’s say you are short. The first thing you can do is assess your investments and determine whether you can generate a higher rate of return. That’s not always possible but that’s where you’d start. The other options are to work a little bit longer or save a little bit more.
The only way to truly know is by sitting down with a financial advisor and running those numbers. That’s something we do with our Money Map review process so let us know if you want to come in to get that started.
The other question we answer on the show today is about capital gains. A listener has a property they inherited that’s been used as a rental but with capital gains tax increases being proposed, would it make sense to sell it?
It’s definitely a great time to consider, especially if you’re thinking about selling it sometime in the next few years. If that’s the case, now might be the best option. You always want to look at the returns you’re earning from the rental property regardless because that might be the best route for determining your answer.
But yes, this is a great time to be asking this question so thanks for sending it in. If you ever have something on your mind, we’d love to hear from you.
0:18 – Mailbag question on retirement savings
1:49 – Where do you stand?
3:19 – Fact of the week
5:48 – Mailbag question on capital gains taxes
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