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Are You Sure You're Saving Enough For Retirement?

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You’ve followed all the financial rules-of-thumb to the letter -- diligently saving at least 10% of your income, maxing out your retirement savings accounts, avoiding high-interest debt, living below your means -- and assuming (or crossing your fingers) that you’ll be set for retirement and whatever life throws in your path until then.

But how confident are you that you’re truly on track? 

Back-of-the-envelope calculations and simple online retirement calculators aren’t exactly the most reliable ways to ensure with confidence that you’re going to reach your goals. And do you really want to leave something this important up to guesswork?

Accounting for All the “What Ifs”

Will your money run out before you die? That may sound crass, but it’s the question that every investor needs to answer… with certainty. The only way to do that is to crunch the numbers and consider all of the potential scenarios. For example:

  • What if you or your spouse decides to exit the workforce for a while to raise children?
  • What if stock market returns are lackluster for the next 10 years?
  • How will higher education costs or caring for an elderly relative affect your investable resources?
  • Exactly what income will be required in the future to provide the lifestyle you envision for you and your family?
  • What areas of your portfolio are most vulnerable to market fluctuations?
  • What if Social Security doesn’t provide the same level of benefits in the future?

You can’t really know if you’re saving enough for your future -- and saving in the right way -- until you put your investing plan through the paces by using historical returns and other reality-based scenarios.

This is the kind of rigorous testing planners do for their high net worth clients. Using sophisticated calculations and modeling, they regularly take the temperature of a client’s portfolio and advise them about everything from how to allocate incoming money to ways to minimize tax bills. 

Bottom line, these advisors measure the likelihood that a client’s portfolio will deliver long-term results -- a.k.a. not run out of money before they die.


Article Credit: Futureadvisor

Updated 2 Years ago

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