When determining whether or not you have enough money to retire, there are many factors to consider, and the size of a nest egg is most certainly not “one size fits all”. One of the most important factors is your lifestyle. Your annual cash flow need is a key factor in the equation. When you consider annual spending, you also want to factor in your debts and monthly payments for mortgages, home equity loans/lines, automobile loans, credit cards, and any other outstanding debt.
Another factor in the equation are your sources of income, including their frequency and term. Considering potential Social Security, pension, royalty, or rental income as various types of income is crucial, as well as maximizing those benefits based on your personal situation. For example, deciding when and how to take Social Security.
Lastly, before you retire, you must also consider your goals for retirement. Do you want to leave a legacy to your children? Would you like to purchase a new home or a vacation home? Are you planning to increase your travel plans significantly or make any large purchases like buying a boat?
Having a good understanding of your needs in retirement alongside your income sources and personal goals will help you to feel more confident in whether or not you have saved enough. At our firm, Braun-Bostich & Associates, we value holistic financial planning that incorporates all of these items, as well as planning for the unknowns like a premature death or chronic medical care need.