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Retirement Income

How Much Retirement Income Is Enough?

How much money should you set aside for retirement? How do you know if you’re on track? Many factors can affect your target saving rate including your retirement age, retirement lifestyle, how long you have been saving, and how much you have already saved. Retirement income largely depends on both your current income and the type of life you plan to lead in retirement. Other factors to consider are the rising cost of health care, the cost of living, and medical advances that have led to a longer life expectancy. Consequently, people need to plan for longer retirements than they did in the past. So, how much retirement income is enough? Because there are many variables to consider when it comes to retirement, you need to select the strategy that will be most suited for you.

WE Could Help You With

Budgeting for Retirement

Making a budget is one of the most important things to do to start your retirement on the right path. A realistic retirement budget takes into account all the sources of income you receive every month. Having to plan for an income in retirement, along with an investment strategy to grow your nest egg, is the foundation of retirement.

Basic Expenses

Let's start with the basics. Healthcare, housing, transportation, and food are among the most important aspects of life and should be considered when making a retirement budget.

Disposable Income

When you have accounted for your essential items, you can start to budget for discretionary items such as dining out, movies, traveling, charitable donations, and those bucket-list adventures. You should also establish an emergency fund to cover any unforeseen expenses.

You can use this budgeting, debt management, and calculator tool to learn how to create a budget, plan for retirement income, and reduce debt.

How Does Inflation Affect Retirement?

A factor that many people overlook when asking “how much retirement income is enough?” is the impact of inflation.  Inflation, simply put, refers to an increase in prices over time on average. Housing prices, groceries, energy, gas, insurance, and other items rise over time due to inflation. 

In the United States, on average, prices have risen by slightly more than 2% per year over the past decade. How about retirement? It’s impossible to estimate how much a typical retirement portfolio will rise in value in the future, but analysts expect a 6% return on average over the next ten years.

For instance, let’s say you have $100,000 saved for retirement. The balance would be $179,084 after ten years, assuming that it grows at a 6% rate per year. With 2% inflation, however, you would pay $57,185 over 10 years. In other words, you’re losing purchasing power.

The key to an effective retirement strategy is to anticipate your future income needs today and in the future. Your financial strategy should provide you with the income you need for the rest of your life. At TW Retirement Solutions, we help you through this process based on your unique circumstances so that you can answer, “How much retirement income do I need?”.

Protect Retirement Income

The earnings many people expect for retirement turn out to be significantly less than they expected. Furthermore, markets and mutual funds, which carry a higher degree of risk, are not ideal choices. For this reason, protecting your principal against loss and making sure your retirement is secure are vital. To enable you to cover your basic expenses (such as food, housing, and insurance) that are not covered by other guaranteed* income sources, such as Social Security or a pension, you may want to consider fixed indexed annuities. In doing so, it will help you create a reliable and simple income stream that you can count on for as long as you live (or for as long as you and your spouse lives). TW Retirement Solutions offers a variety of options, including fixed indexed annuities (FIA). Our investment strategy aims to balance growth potential and risk while protecting assets and generating a reasonable return of return.** It’s our goal to help you feel confident when answering the question, “How much retirement income is enough?”

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Contact TW Retirement Solutions

Call 970-744-8342 or fill out this quick contact form for a no-obligation, no-cost consultation to review  options.

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