Date: November 2, 2020

Are You Part of this Retirement Statistic?

I read recently that only 40 percent of Americans have calculated how much they need to save for retirement. That statistic is shocking!

Knowing how much to save now can seem mysterious, but it really shouldn’t be. How do you reach a goal if you don’t know what to do to get there? This is a fundamental step for any goal, but retirement may be the most important one you have. Living comfortably when you no longer receive a paycheck is not a given – it’s something you have to plan for and work toward.

With a little forethought and the help of a financial advisor, you can – and should – take steps now to secure your future, now.

Know Your Retirement Needs

There is a well-worn belief that you will need your retirement income to be approximately 80 percent of your pre-retirement salary. However, many high-income professionals may find that percentage to be inadequate. The main reason is lifestyle.

Just because you have a good income now that allows you to travel, shop and dine out, it does not mean you’ll be able to maintain that lifestyle later on. And with more free time when you’re no longer working, you may want to do more – more dining out, longer trips to far-flung destinations, and more events and venues to check out.

In addition, retirement may give you the time to pursue new interests and hobbies, some of which may be expensive. Under these circumstances, you might need 100 percent or more of your pre-retirement income to live the life you want. The good news is that, with proper planning, your chances of achieving a well-funded retirement are excellent. The bad news: Postponing your planning can leave you disappointed.

Not being able to retire when and how you want is one of the biggest retirement concerns people have. Have you addressed it?

Let a Financial Advisor Help You Plan

There are many variables to consider when planning your retirement. These include your current wealth and income, your age, your planned expenses, inflation, taxes and your attitude toward risk. Each variable can have profound implications for your retirement. It makes sense to work with a financial advisor to understand those implications and the resulting decisions you need to make right now.

A financial advisor can show you options you may not have considered on your own. Even more importantly, an advisor can help you prepare for contingencies if your plans change – and make no mistake, the chances are excellent that your retirement goals will evolve as the time approaches. At Heritage Capital, we help organize our clients’ goals into a set of plans for saving, investing, charitable giving, tax planning and estate planning. These plans have both strategic and tactical elements that require action now in order to succeed.


Retirement planning is too important to put off. Contact Heritage Capital and get the conversation started.


Start Saving and Stick to It

Every plan requires important decisions and funding. Your financial advisor should be a critical resource for figuring out how much you need to save now for your plans to work. In the simplest terms, this means knowing how much of your income to divert for future rather than current needs. It also means your chances of succeeding depend on your self-discipline – your ability to commit to a savings program and stick to it year after year.

The 4 percent rule of thumb is a popular starting point for the amount of money you can spend each year in retirement. But that’s all it is, a rule of thumb. Your retirement plans may require a different, and higher, spending rate. You can only know for sure by working out your plans and running the numbers under a variety of scenarios. That’s just part of the value a financial advisor provides.

How you allocate your savings is as important as the amount you stow away. Tax-advantaged retirement accounts are the foundation of your savings and investment plans. It’s important to structure an investment portfolio with the potential to provide sufficient risk-adjusted returns. The risk part of the equation is paramount and depends on asset allocation and strategy diversification so you don’t end up making emotional decisions at precisely the wrong time. Market volatility is one of the biggest retirement concerns we hear about. Have you addressed it?

Start Early

The miracle of compounding is key to the growth and preservation of your wealth. It requires that you start saving early and that you stick to your savings plan over time. By starting early, you benefit from the long-term growth cycles of the financial markets. That’s because you have enough time to recover from down cycles and investment mistakes. With a long investment horizon, it’s much easier to invest without succumbing to wealth-destroying panic.

With a consistent savings plan, you can take advantage of down markets to buy assets on the cheap rather than locking in losses by selling during a bear market.

What Often Happens

 Unfortunately, what happens a lot of the time is a pre-retiree in their mid- to late-50s (or even worse, a retiree) comes into our office at Heritage Capital with no idea how much they need to retire. They’re ready to retire, but often, they can’t. This can even happen to high net-worth individuals who assumed their money would sustain them through their Golden Years.

I don’t know if there’s anything more disappointing – reaching retirement age without sufficient savings to quit work. It happens more often than you’d think, even with the ascendance of 401(k) plans. The problem is that too many folks put their retirement account contributions on auto-pilot in terms of how much they contribute and how the money is invested.

Contributing to retirement accounts without knowing how much money you’ll need to retire is a formula for disappointment. By working out your retirement needs now, you’ll have a much better idea of how much to contribute and how to invest it. If you can’t achieve your goals though the options available at your workplace 401(k), you can utilize different options you’ve worked out with your financial advisor. If you don’t know your options, you can’t take advantage of them.

Beyond IRAs, your plans can (and probably should) include trust accounts and insurance products that help you achieve your goals for yourself and your beneficiaries. A fiduciary financial advisor will show you how to approach estate planning with sophisticated solutions you might never have contemplated on your own.

Not having enough to support your family when you’re gone is another one of the biggest retirement concerns people have. Have you addressed it?

Why Some Couples Disagree on How Much They Need

It’s a common predicament – you and your spouse disagree on what your retirement life will look like. You may have different interests and priorities, with different expectations on how, where and with whom you’ll spend your time. Joint planning with mutual buy-in is the solution.

A financial advisor can be a great third-party tool to help take each person’s desires into account and work out shared plans that give you both the best chance of a happy retirement.

Don’t be part of the statistic. Contact Heritage Capital today and get the conversation started.

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Paul Schatz, President, Heritage Capital