Describing a common situation many people face when saving for retirement, and how Wealth E&P can help
October 25, 2021
Welcome to Wealth Enhancement & Preservation’s Market Minute, where we get to update you on everything that happened in the financial markets this past week. My name is Jake Sanders, and I am a partner at Wealth E&P and operate as a Wealth Advisor and Certified Financial Planner. Today I want to talk about your retirement contributions – either in your 401 (k), your IRA, your 457 plan, and others. I have an example for you below.
This is a very typical person’s situation, and in this example, they are 40 years old. They have already saved $500,000 in their retirement accounts, in either IRAs or active 401 (k)s. They make $150,000 a year, and on that $150,000, they have decided to put away a 5% contribution that includes a 4% match into their company's 401 (k). In other words, $1,125 dollars per month.
They want to retire at age 65, which is very common, and that is in the calendar year 2046. They estimate they'll need about an 80% income replacement, which equates to $10,000.
In this particular case, you can see a lot of red here, which is not good; they only have a 22% chance of retiring successfully. In other words, they’re likely to run out of money before they pass away at this rate, which may mean they need to adjust their plan.
This is obviously not a good situation, but I share all this because this is a very common scenario. The numbers can vary and things could be different for you; you may not need as much income as this example, or you may need more. However, too often we see people make the decision to contribute to their retirement based purely on their match, without thinking a whole lot about what that is going to get them whenever that day comes.
If you'd like a review of your retirement plan, if you'd like to come in and talk to us, or if you’d like to have someone take a second look, we'd be more than happy to discuss it with you. If you have any other questions for us, please feel free to reach out or visit www.wealthep.com. Otherwise, stay tuned for our Market Minute next week; and of course, Go Braves!
At Wealth Enhancement & Preservation, we are here to serve as your financial advisor and source of support in the Alpharetta, GA, Cartersville, GA, and Charleston, SC areas. Our advisors are dedicated to simplifying the complexities of the financial world and as your advocate, we strive to learn about your most valued goals and dreams. From individual investors to entrepreneurs, our services are designed for your success.