Most people seek confirmation that they have accumulated enough for the remainder of their years.
You can put a lot of effort into saving for retirement and still have questions. However, it is important to know that the success of your plan will often be your income to expense ratio, according toInvestopedia's article “Determining If You're Prepared for Retirement.”
Commonly asked questions are:
- Am I saving enough, or did I save enough?
- Can I retire, or did I make a mistake and retire too early?
- Were my investment decisions the right ones?
- How am I doing, compared to my peers?
The answers to these questions are important, but like so many things in life, there is no “one-size-fits-all” answer. Just because you've accumulated six, seven or even eight figure retirement savings, doesn't mean you've “won” the retirement game. In this case, size doesn't always matter.
One of the key factors to a successful retirement is your income to expense ratio. Can you generate enough income from all sources, without drawing down too much from your portfolio?
If you have a small to non-existent portfolio, but you have a good-sized pension, maybe you don't need such a big portfolio. If you live very simply, it's possible that Social Security benefits and modest withdrawals from your investments might take care of your needs.
Remember that just because you have a large portfolio, does not mean you don't risk running out of money during retirement. If you spend lavishly on first-class vacations, drive luxury cars and live in a house that costs a fortune to run, you can easily get yourself into a tight spot.
Take a long hard look at all sources of income to determine how long your portfolio will last. You should include Social Security, pensions, retirement accounts and any other sources of income. It is important to figure out how much income you'll need on annual and monthly basis. You'll then have a better sense of whether you are prepared for retirement.
An estate planning attorney can advise you on creating an estate plan that fits your unique circumstances, as well as point out options on planning for your retirement.