How the “Millionaire Next Door” Can Approach Retirement Planning

Many of today’s retirees are the wealthiest retirees of all time. Rising home values, strong market returns, and a generation of dedicated workers mean there are more millionaires than ever. But, even if you have built a substantial nest egg, you may not feel like a millionaire and may be worried about how you’ll maintain your lifestyle in retirement and avoid running out of money. Here’s what you can ask yourself when planning for retirement.

How Much Money Do You Need to Retire?

Don’t know how much you need to save before you can retire? Start by figuring out how much money you’ll need year-to-year in retirement. List out your major expenses, think about if you’ll want to travel or pursue more leisure activities once you have unlimited free time, and start tracking your expenses. There’s no magic number you need to hit. Everyone’s income needs in retirement are different. It’s also important to have a strategy for not outliving your savings. 

How Much Will You Pay in Tax in the Future?

While you may not think of taxes as a risk factor, the fact that they can be raised makes them a risk. This is especially true if you have a significant amount of money saved in a tax-deferred account like a traditional 401(K) or IRA, own real estate, or want to pass on your wealth in a tax-efficient manner. Taxes may be relatively low right now compared to later in your retirement. Most of the provisions in the Tax Cuts and Jobs Act will expire at the end of 2025[1], and the Biden administration has proposed several potential tax-increasing measures on individuals. By taking advantage of current rates and working with a professional, you can create a long-term tax minimization strategy for retirement, and adjust it as needed.

 What Can You Do?

By the time we reach a certain point in our careers, we become experts. The same goes for parenthood if you have experience raising children or step-children. Practice makes perfect, and specialized knowledge can be invaluable. Just like you became a master of your trade, we’re a master of ours. We help guide people through the retirement process and create a plan that’s designed specifically for them. Schedule your complimentary retirement readiness meeting to get started.