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David Brown

How to Figure Out How Much It Will Take to Retire

Retirement planning requires figuring out exactly what you want to accomplish.




A KEY COMPONENT of planning your work/life balance is knowing when to call it a day. Quality of life can depend on three important factors: money, time and health. We often spend the first part of our life focused on accumulating money while trading time to do it. As a young person, we can be time- and money-poor but health-rich, but as we grow older and our income power and wealth accumulate, the balance starts to change. By the end of our lives, we may be financially set up but lack the health to enjoy the things that money can buy us.

The “trick” is to make the transition when it counts: when you’re wealthy enough to enjoy yourself but still well enough to make the most of the experience. Knowing when this is from a health perspective can be a challenge — a sudden illness can put paid to the best laid plans — but one thing is certain, your health will generally not improve as you age.

Your income and wealth can be a little easier to predict. Some simple budget planning based on current wealth goals and a continuation of your income and its growth rate will answer the first part of the equation — at what point you will reach the ideal level of wealth in order to “call it a day.” The amount that you will need will depend on the extravagance of your lifestyle. Sitting at home in rural Kansas will be a considerably cheaper retirement choice than jetting around the world or setting up a retirement hideaway in Manhattan.


Another factor to consider is your legacy. Do you plan on leaving a sum for loved ones or a favored charity? If so, how much? Or is your mission to clean the bank account out by the last day? Having a lump sum left at the end will increase the amount of money you will need to sock away and may extend the time you will need to continue working.

Whatever method you work with, keep in mind that even as you spend your money down after retiring, the remainder will still bring in a return for you based on the power of compounding. The 4% rule is often cited as an example of how much of your savings you should spend each year in retirement. On the surface, this would seem to indicate your savings would last you 25 years (4% each year x 25 is 100% of your savings used up), but remember, the money that isn’t spent is still working for you, so it’s generally assumed this method can potentially give you 30 years of comfortable living.



This Third-Generation Jeweler Was Ready for Retirement. He Called Wilkerson

Retirement is never easy, especially when it means the end to a business that was founded in 1884. But for Laura and Sam Sipe, it was time to put their own needs first. They decided to close J.C. Sipe Jewelers, one of Indianapolis’ most trusted names in fine jewelry, and call Wilkerson. “Laura and I decided the conditions were right,” says Sam. Wilkerson handled every detail in their going-out-of-business sale, from marketing to manning the sales floor. “The main goal was to sell our existing inventory that’s all paid for and turn that into cash for our retirement,” says Sam. “It’s been very, very productive.” Would they recommend Wilkerson to other jewelers who want to enjoy their golden years? Absolutely! “Call Wilkerson,” says Laura. “They can help you achieve your goals so you’ll be able to move into retirement comfortably.”

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