Fisher Investments: Navigating The Retirement Conundrum

Fisher Investments offers a free guide to help you plan for retirement. The guide answers questions such as how much money you'll need to retire, when you should start planning for retirement, and how much you can safely withdraw from your portfolio yearly. Fisher Investments also has a retirement calculator tool to help you visualise what your finances might look like once you retire and how much you should save now to get the retirement you want.

How to calculate the amount of money you'll need to retire

When it comes to retirement planning, one of the most important questions you'll need to answer is, "How much money do I need to retire?" The answer to this question will be different for everyone and will depend on a number of factors. So, it's important to understand the key considerations and steps to take when calculating your retirement number.

Start by estimating your retirement expenses. Will you own your home outright, or will you have a mortgage or rent to pay? What about healthcare costs, travel plans, and everyday expenses? Consider any sources of income you expect to receive during retirement. This could include Social Security benefits, a pension, or income from part-time work. Each of these sources can reduce the amount you need to withdraw from your retirement savings.

Next, you'll want to factor in inflation and the potential for increasing healthcare costs as you age. Even a low inflation rate can significantly erode your purchasing power over a 20- or 30-year retirement, so don't skimp on this step. Once you have an idea of your expenses and income, you can start playing with the numbers. Use a retirement calculator to input your current age, expected retirement age, current savings, and expected annual returns on your investments. Be sure to account for any large one-time expenses, like a new car or home repairs, that might crop up during your retirement.

The rule of thumb is that you'll need about 80% of your pre-retirement income to maintain your current standard of living. However, this number is just a guideline, and your individual needs may vary. It's important to be realistic about your retirement expenses and income, as well as the potential for unexpected costs, when calculating your retirement number. It's generally recommended that you plan to replace 80% of your pre-retirement income in retirement. This is because most people's expenses tend to decrease once they retire and they no longer have to commute to work or pay for work-related expenses. However, this is just a rule of thumb, and your individual needs may vary.

Here's an example to illustrate the process: Let's say you estimate that you'll need $50,000 per year in retirement to cover your expenses, and you expect to receive $20,000 per year from Social Security and a part-time job. That leaves $30,000 per year that you'll need to withdraw from your retirement savings. If you expect to spend 30 years in retirement, you'll need about $900,000 saved ($30,000 x 30 years). Keep in mind that this is a simplified example and doesn't factor in things like inflation, investment returns, or one-time expenses. That's why it's important to use a comprehensive retirement calculator that can account for these variables when doing your own retirement planning.

In summary, calculating the amount of money you'll need for retirement involves estimating your retirement expenses, factoring in income sources like Social Security and pensions, and using a retirement calculator to account for variables like inflation, investment returns, and one-time expenses. By taking the time to go through these steps, you can get a more accurate picture of the savings target you'll need to aim for to achieve a secure and comfortable retirement.

When to start planning for retirement

Retirement is a significant milestone in one's life, and planning for it is essential to ensure financial freedom. So, when is the right time to start planning for retirement? The short answer is now! Regardless of your age or career stage, it is crucial to begin thinking about and preparing for your retirement as early as possible.

The first step in retirement planning is establishing clear financial goals. These goals will vary depending on your unique circumstances and priorities, but some common objectives include maintaining your current lifestyle, increasing your wealth, or simply ensuring you do not run out of money. It is important to remember that your goals may evolve as your life changes, so having a flexible and adaptable plan is key.

Next, you need to determine your investment time horizon, or how long you need your assets to last. This calculation should take into account not only your life expectancy but also that of your spouse or partner, especially if they are likely to outlive you. If you have children or grandchildren, you may also want to factor in their time horizons if you plan to pass on a portion of your wealth.

With your goals and time horizon in mind, you can start considering the different investment options and account types available. Common retirement investments include stocks, bonds, exchange-traded funds (ETFs), mutual funds, and real estate. Each of these options comes with its own set of risks and potential rewards, so it is essential to understand them before deciding where to allocate your savings.

When it comes to retirement accounts, you have several options, including traditional and Roth 401(k)s, traditional and Roth IRAs, defined contribution plans, and defined benefit plans (pensions). Each account type has different contribution limits, tax implications, and withdrawal rules, so choosing the right ones for your situation is crucial.

As you approach retirement, you will want to fine-tune your plan and consider strategies for generating income during retirement. While some financial experts recommend shifting towards income-producing securities like bonds, others argue that this advice can be short-sighted, as it may not allow for sufficient growth to cover your expenses over a potentially long retirement.

Retirement planning can be complex and stressful, and it is important to seek guidance from a trusted financial partner. Fisher Investments offers resources to help individuals navigate this process, including guides and calculators to estimate how much income you will need in retirement and how much you should save to achieve your goals.

Remember, the key to successful retirement planning is starting early, setting clear goals, understanding your investment options, and regularly reviewing and updating your plan as your life evolves.

How to generate retirement income

Retirement planning can be a stressful and complex process, but Fisher Investments can help you generate retirement income and achieve your financial goals. Here are some detailed and instructive guidelines on how to generate retirement income:

Set Clear Financial Goals

Firstly, you need to establish your financial goals for retirement. This could be maintaining your current lifestyle, increasing your wealth, or simply ensuring you don't run out of money. Clear and realistic goals will help guide your retirement planning process.

Create a Comprehensive Retirement Plan

Retirement planning involves many variables, but it doesn't have to be overwhelming. Fisher Investments recommends starting with your investment time horizon – how long you need your assets to last. Consider not just your life expectancy but also that of your spouse or partner, and whether you want to leave any wealth to future generations. Then, compile an income and expense report to understand your income needs and any potential gaps.

Understand Your Investment Options

There are various types of investments and accounts to consider for retirement. Common investments include stocks, bonds, exchange-traded funds (ETFs), mutual funds, and real estate. Each has its own characteristics and potential for growth or steady income. Common account types include traditional and Roth 401(k)s, traditional and Roth IRAs, and defined contribution plans. Understanding the risks and benefits of each option is crucial for making informed decisions.

Fine-Tune Your Plan as You Approach Retirement

As you get closer to retirement, you may want to seek advice on income strategies and financial planning. Fisher Investments cautions against shifting all your assets to income-producing securities like bonds, as this may underestimate the long-term growth needed for your assets to last. They recommend exploring other ways to generate retirement income while still achieving necessary growth.

Continue Managing Your Investments in Retirement

Retirement is not the end of your financial journey. Your retirement savings will still need to work hard for you, and you should manage them responsibly to ensure they last. Fisher Investments offers guidance on how to navigate this important transition period and make the most of your retirement years.

Utilize Available Resources

Fisher Investments provides various resources to help you plan for retirement, including guides, calculators, and personalized advice. Their "When to Retire" guide helps you calculate the amount of money you'll need, when to start planning, and how much you can safely withdraw from your portfolio. "The Definitive Guide to Retirement Income" offers insights into asset allocation, investment income sources, and annuities. Additionally, their retirement calculator can help you visualize your finances in retirement and determine how much you should save.

Remember, retirement planning is a unique and individual process, and it's important to seek guidance from trusted financial partners. By following these steps and utilizing the resources offered by Fisher Investments, you can take control of your financial future and generate the retirement income you need.

How to invest for retirement

Retirement planning can be a daunting task, but with the right approach and guidance, you can set yourself up for a comfortable retirement. Here are some detailed instructions on how to invest for retirement, focusing on the insights provided by Fisher Investments:

Set Clear Retirement Goals:

Understanding your financial goals is the first step towards successful retirement planning. Common retirement goals include avoiding running out of money, maintaining or improving your current lifestyle, increasing wealth, and leaving an inheritance. It's important to prioritize these goals and be clear about what you want your retirement to look like.

Determine Your Investment Time Horizon:

Your investment time horizon refers to the length of time you need your assets to last. This is crucial for planning how much you need to save and invest. Consider not just your life expectancy but also that of your spouse or partner, especially if they are likely to outlive you. If you plan to leave an inheritance, factor in the time horizons of your children or grandchildren as well.

Calculate the Required Income:

Estimate the income you will need during retirement. As a general rule, most people require about 80% of their pre-retirement income to maintain their current lifestyle. Consider expenses that may change or disappear after retirement, such as work-related costs, taxes, and supporting children.

Choose the Right Investments:

Common types of retirement investments include securities (stocks, bonds, exchange-traded funds (ETFs), mutual funds) and real estate. Each investment type has its own characteristics and risk/reward profile. For example, stocks may offer more growth potential, while bonds provide steady income. Diversifying your portfolio across different investment types can help balance risk and reward.

Select Appropriate Account Types:

Familiarize yourself with different retirement account types, such as traditional and Roth 401(k)s, traditional and Roth IRAs, defined contribution plans, and defined benefit plans (pensions). Understand the tax implications and contribution limits associated with each account type, as these factors can significantly impact your savings and withdrawal strategies.

Seek Professional Guidance:

Retirement planning can be complex, and it's easy to fall prey to harmful myths and misconceptions. Consider seeking guidance from a trusted financial partner, such as a retirement advisor or financial planner. Fisher Investments, for example, offers a free planning guide and portfolio evaluations for qualified investors. These professionals can help you navigate the maze of investing options and develop a comprehensive retirement plan tailored to your unique circumstances and goals.

Remember, the key to successful retirement investing is starting early, educating yourself, and seeking professional advice when needed. By following these steps and adapting your plan as your life circumstances change, you can increase your chances of achieving a comfortable retirement.

How to manage your retirement savings

Retirement planning can be a stressful and challenging process, but it is important to start thinking about it early on, no matter your age or career stage. Here are some tips on how to manage your retirement savings:

Set Clear Financial Goals

Understanding your financial goals is crucial for successful retirement planning. Common goals include avoiding running out of money, maintaining or improving your current lifestyle, increasing wealth, or even spending everything before passing. These goals may evolve as your circumstances change, so it's essential to have a flexible plan that can adapt to your needs. Clear and regular communication with a financial advisor or planner can help ensure your portfolio aligns with your goals.

Create a Comprehensive Retirement Plan

Retirement planning involves various variables, but it doesn't have to be overwhelming. Start by setting your financial goals, then determine your investment time horizon, which is how long you need your assets to last. Consider your life expectancy and that of your spouse or partner. If you plan to leave a legacy for future generations, factor in their time horizons as well. Additionally, compile an income and expense report to understand your income needs and identify any gaps. The earlier you start planning, the better your chances of success.

Choose the Right Investments and Account Types

Once you know your goals and time horizon, explore different investment options and account types. Common retirement investments include stocks, bonds, exchange-traded funds (ETFs), mutual funds, and real estate. Each has its own risks and rewards, so it's important to understand them before deciding where to allocate your savings. Traditional and Roth 401(k)s, traditional and Roth IRAs, and defined contribution plans are popular retirement account types, each with its own tax implications and contribution limits.

Understand Risk and Reward

Investing for retirement often requires balancing risk and reward. You need to find the right mix that gives you the best chance of reaching your goals. While some income-producing securities, like bonds, may be considered lower risk, they might not provide the necessary growth for your assets to last your entire retirement. Understanding the risks and benefits of different investments is crucial for making informed decisions.

Seek Professional Guidance

Retirement planning can be complex, and it's easy to feel overwhelmed by the variety of financial service professionals offering advice. When choosing an investment advisor or planner, look for someone who understands your unique financial situation and goals. Fisher Investments, for example, offers easy-to-understand retirement planning guidance tailored to your needs, helping you navigate the world of investing with no hidden fees.

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