Whether you've gotten a late start or you're starting over, you may want to (or need to) save
for retirement in a limited number of years. So, is that possible? The short answer is yes, and by
the end of this video, you'll have some ideas and some tools that help you figure out exactly how.
I'm Justin Pritchard, I'm a fee only certified financial planner in Colorado, and i work with
people all over the U.S. We're going to go over what it takes to save for retirement within 15
or 20 years to build up the assets you need during that time. It's helpful to have some good fortune,
right, it's not as easy as if you started at age 18 and were setting aside money each year. So,
the higher your earnings are right now, the easier that's going to make it for you to
do this in a short period of time. Other things that can help are good health. The less you need
for health care spending in retirement, the less you need to build up for your retirement savings.
These are just areas where, again, some good luck can help make this easier. We want to start by
figuring out where you stand, and that might be looking at a "base" of income that you have. So,
these are guaranteed sources of income like your Social Security or your pension from an employer,
and those are typically monthly payments. They can form, again, the base of what you need each month.
Then, if you need more than that, you might be taking withdrawals from your retirement savings.
So the question becomes: how much do you need to withdraw each month? And then we're going
to figure out how much you need to accumulate to support those withdrawals. By the way, as
unpleasant as it might sound, working part-time in retirement (which doesn't sound like retirement)
that can be extremely powerful because that reduces the amount you need to withdraw.
And you don't need to do this for your entire retirement, but doing it for a couple of years,
maybe as you taper off, can certainly help your retirement chances so we start by figuring out
how much you need to take each month and there are a lot of calculators that can help you figure this
out including some on my website but as you figure out how much you want to withdraw again this is
in addition to or on top of the income you're getting from Social Security so this is just
money that you're going to take out of your accounts that extra amount you need each month
then we can figure out what's a lump sum that you might need at retirement this is an estimate based
on the multiply by 25 rule and so it doesn't give you a perfect picture like a detailed financial
plan would but this gives you a nice ballpark idea of how much you might want to have saved
at retirement the answer might be a really big number so here is some information that might make
that less daunting to you the first is that your employer might help you save this money so you
don't necessarily need to set aside every penny of that so if you're getting matching contributions
or profit sharing contributions at your workplace that helps contribute to the amount you need next
is that you can increase the amount that you save in future years so if the monthly amount you need
to save is higher than you can afford right now just do the best that you can with what
you can do now and then in future years you may be getting raises you may be advancing in your career
and you may be able to contribute more so just do what you can for now if you happen to be limited
by tax rules that say you can only contribute a certain amount per year with those rules typically
allow you to increase the contributions in future years so they might adjust for inflation
or after you reach age 50 you might be able to do an increased catch-up contribution and you
can also save in taxable accounts so these are not retirement accounts that have annual limits
on how much you can set aside but they're just let's call them normal accounts with no real tax
benefits but they still allow you to set aside money for your future and finally the longer
you wait to take benefits like social security or your pension and the longer you keep working
you typically get an increase in those benefits so that can possibly reduce the amount that you need
to save so if you wait a certain number of years maybe your monthly income from those programs
would be higher which can make it easier for you so once we know how much you need to save in a
lump sum this is our savings goal that we're going to have at your retirement date and remember this
miter might not be adjusted for inflation so there may be a couple of extra steps here but if your
retirement is relatively soon these numbers might be you know somewhat close again ballpark numbers
we can figure out what it takes to reach that number in in other words how much does it take
for you to to contribute each year or each month to reach this goal a lot of people with a limited
number of years to retirement sometimes want to know about just investing really aggressively
so that they can build up those account balances in a short amount of time well that is certainly
possible but by taking risk that will hopefully result in big gains you're also taking the risk of
potentially large losses and if you have a limited amount of time before you're going to retire
you know oftentimes the most important thing is how much you're setting aside each year
you can't necessarily invest your way to a huge portfolio or if you do it means you're taking a
substantial amount of risk and that could go in your favor or it could go the other direction
so you want to be very cautious about that something that might be very helpful in some
cases is a widow or a spouse's or an ex-spouse's benefit so as you look at what retirement benefits
are available to you through social security or a pension it's possible that you can receive
income based on you know somebody that you were married too long ago even there are certain rules
and requirements that need to be met but don't ignore those as you do your retirement planning
because you may qualify for benefits i hope this is helpful again I'm Justin Pritchard,
a fee only financial advisor and if you'd like to discuss working together to plan your retirement
I'd love to hear from you please reach out and we can talk more please subscribe to this channel it
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