Each of these colleagues were in their 50s and agreed that they wanted to retire before the age of 65.
They all believed 65 was the magic number that offered a healthful quality of life, ensuring enough time to enjoy the benefits of their golden years including their grandchildren, travel or hobbies.
While a target number of 65 for a retirement age is great, I think it’s the wrong number to focus on. There is only one retirement number that matters and it’s not ages 55, 60, 62 or 65.
I hate to say it, but the only retirement number that matters is the total dollar amount in your retirement plan.
And the key phrase in that last sentence is – retirement plan. The idea of retiring at 55 is wonderful, but if you don’t have a plan in place it won't happen.
Because once you’re on a fixed income (by definition “fixed” means unchanging) after retiring, that income had better be able to keep pace with a minimum three-to-four percent annual increase in the rate of inflation (cost of goods you purchase) – otherwise, the money will run out.
If you think it’s difficult finding work in the current economy, how tough will it be to land a part-time gig when your 80 regardless of the country’s economic health?
To avoid that dollar-doomsday scenario, talk to a financial advisor now. One of the best ways to find a money manager is by referral. Talk to a co-worker or family member you trust and that seems to be doing well. Ask them whom they would recommend.
A great resource to learn what to look for in a wealth manager is the Chartered Financial Analyst (CFA) Institute. The independent organization offers a list of investor tools that can help you get started.
Some of the questions you’ll need to ask yourself and your advisor:
- Given longer life expectancies, will your retirement savings last until you’re 95 years old?
- Can your savings replace at least 60 percent of your pre-retirement earnings?
- Do you plan to have your mortgage paid off?
- Can you cut your living expenses by at least 20 percent?