By Daniel Korleski, MBA
Having a solid nest egg is a great start to a stable retirement, but the real question is, will it last? Life has a way of throwing curveballs: unexpected expenses, changes in how you want to live, and unpredictable markets can all chip away at even a healthy retirement fund. That’s why it’s essential to design a plan to make it work for the long haul.
The key is understanding your unique retirement savings target, a number that aligns with your desired lifestyle, estimated future expenses, and income sources. Instead of relying on generic formulas or rules of thumb, take time to assess your unique goals and financial picture.
This article walks you through the steps for evaluating whether you’re on track to meet your retirement savings target so you can comfortably sustain your lifestyle throughout retirement.
When Do You Want to Retire?
The first thing to consider when deciding how much money you need to save is your age, both now and in retirement. If you wish to retire early, you have fewer years to save for a longer retirement. Additionally, if you begin receiving Social Security payments prior to reaching full retirement age, you’ll have to account for a lower monthly payout.
The state of the stock market can also influence how much money is required and how long it lasts. Of course, you can’t actually predict the state of the stock market when you retire, but it’s still a wise idea to plan for the possibility of retiring in a bear market.
What Type of Lifestyle Do You Envision for Yourself?
Have you given any thought to the kind of retirement lifestyle you want to live? If you’re certain you want to travel, play golf, or spend time with your grandchildren, consider what that entails and the associated expenses.
For example, if you intend to travel, ask yourself the following questions:
- Do I want to travel abroad or domestically?
- How frequently would I like to travel?
- How would I prefer to travel? (e.g., car, airplane, or RV)
- Where would I like to stay? (e.g. a five-star hotel, an Airbnb, or with family members)
- Do I want my family to join me on the trip? Do I plan to cover their expenses too?
- Can I continue to live at my primary home? If so, who can watch my house and maintain it while I’m traveling?
Even if your dream is simply to spend time with your grandchildren, you should still think through the associated costs. To some, spending time with grandkids means babysitting a few times a week. For others, it means footing the bill for various trips for the entire family.
Either way, plan out the specifics of your vision so you can see how much money is needed to make that dream a reality.
What Is Your Current Debt Level?
Let’s talk about another retirement-income influencer: debt.
There are two significant drawbacks of taking on debt in retirement:
- It reduces your cash flow for non-essential items like housing, travel, and hobbies.
- It can deplete your retirement funds more quickly, meaning you might eventually run out of money or have to change your lifestyle.
If you carry debt, a smart move is to carefully examine your debt and determine how much cash flow you need in retirement to pay for anticipated expenses.
Before they retire, some people prefer to pay off any high-interest consumer debt. Some even go so far as to pay off their auto loans and mortgage.
Are You Planning to Work in Retirement?
One of the better ways to stay active, keep your mind sharp, and feel purposeful after retirement is to work.
Some retirees decide to pursue consulting as a second career. Others choose to take a part-time, low-stress job and work at a retail store or family office.
Whatever you decide, you won’t need to save as much to live comfortably if you plan to work after retirement.
Professional Support to Meet Your Retirement Savings Target
Evaluating your retirement savings target means looking closely at your finances, lifestyle expectations, outstanding debt, and long-term goals.
At Cobalt Private Wealth, we focus on what matters most to you, clarifying and strategizing your personal vision of retirement. By entrusting your financial planning to our team, you gain confidence knowing your future is being guided with integrity, honesty, and care.
Let’s talk about how we can help. Reach out to me at danielkorleski@cobaltprivatewealth.com or 719-332-3863 to schedule a meeting.
About Dan
Daniel Korleski is the President & CEO for Cobalt Private Wealth, where he helps his clients grow, manage, and protect their wealth so they can work toward a stronger financial future. With over 30 years of experience in the financial services industry, Dan has served as the managing director for Investment Trust Company, chief investment officer for the Wealth Management Group at American National Bank in Denver, and regional investment manager for the Greater Colorado Region of the Private Bank at Wells Fargo, where he oversaw the management of over $2 billion. In 2008, he was appointed by the mayor of Colorado Springs to the City’s Investment Advisory Committee. Dan holds an MBA in investment management from Midwestern State University in Wichita Falls, Texas, a Bachelor of Science in Finance from Florida State University, and is a member of both the CFA Society Colorado and The Financial Planning Association.
Dan loves to give of his time to his community and is currently serving as the Board Chair of Catholic Charities of Central Colorado and oversees the Homebound Ministry at St. Paul Catholic Church. He has also served as Chair of the Board of Trustees of Pikes Peak Hospice Foundation, President of the Broadmoor Rotary Club, and Vice President of the Board for the Pikes Peak Chapter of Trout Unlimited. Dan was born and raised in Spain and is fluent in Spanish. To learn more about Dan, connect with him on LinkedIn.
