How Much Should I Be Investing for Retirement?

Nov 22, 2022 | All Posts, Blog | 0 comments

Investing for retirement can sometimes feel like a guessing game. If you find yourself wondering whether you’ll have enough to live on when your retirement years arrive, you’re not alone. Fortunately, it is possible to plan well for retirement and have peace of mind that when the last day of your working years comes and goes, you’ll be financially ready. If you’ve been asking, “how much should I be investing for retirement?”, read on to find out!


How much should I be investing for retirement?


For most people, 15% of your income is a good rule of thumb when it comes to investing for retirement. In general, if you invest 15% throughout your working years, you will be well-prepared to fund a comfortable lifestyle when you retire.

However, do keep in mind that this is simply a rule of thumb and varies by situation. For example, if you don’t start investing until later in life, you’ll most likely need to up the percentage that you take out of each paycheck for investments. In addition, if you’re planning for a luxurious retirement lifestyle full of travel or other large expenses, you will also likely need to invest more than the average person.


How much should I have saved by the time I retire?


The amount of money that you should have saved by the time you retire varies greatly from person to person. Some factors to consider include where your money is invested (will it grow faster than inflation?) and the lifestyle you plan to have during your retirement years. Many people wonder if $1 million (plus Social Security) is enough to fund retirement. For the average person, the answer is a likely, “yes”.

In order to make sure that you will have enough invested for retirement, we highly recommend both sitting down to make a plan for your retirement years and investing with a financial planner.

The person who plans to live modestly in a paid-off home during retirement will have far different investment needs than the one who wants to travel often or move to a more expensive area.

In addition to thoroughly thinking through your retirement plans with a trusted friend or spouse, we encourage you to diversify your investments in areas that will cause your money to significantly grow. Then, leave it alone and don’t make rash decisions based on every up and down in the market. An experienced financial planner can help you to make the best decisions about where to invest and how to see the greatest increase in your investments.


What should I do if I’m starting to invest later in life?


If you’re starting to invest later in life, it can be easy to give in to worry. While we understand the anxiety that can come with retirement planning, we also warn that making reckless and impulsive investment decisions usually does more harm than good.

So, what should you do if you find yourself in your 40s and you’re just getting started on seriously investing? First of all, take a deep breath. Sit down and take a few days or weeks to think. Read about investing and how it works. Move slowly. Take time to get comfortable. Talk to a financial planner who will really get to know you and your situation. Then, together, make a plan for how you can achieve your goals.


What avenues should I use to invest?


When it comes to investments, here are some of the avenues that we most often and most highly recommend to our clients:

  1. 401(k) match
  2. Roth IRA
  3. Taxable account
  4. Annuity contract or cash value life insurance (for higher earnings)
  5. Health savings account
  6. Stocks and bonds

Once again, please keep in mind that not all options will be a good fit for everyone. It’s important to get advice from an experienced financial planner who will take your situation into account before making decisions.


Can I depend on Social Security?


Most people start receiving Social Security checks around age 65. For retirees, Social Security is a nice icing on the cake for those who have diligently invested for retirement. However, in most cases, it will not be enough to solely provide for your needs.

Think of Social Security as a helpful supplement. Don’t depend on it to allow you to maintain the same lifestyle you enjoyed during your working years.


I’m ready to start investing. What should I do now?


At Milestone Wealth Management, we believe that you can be prepared for your retirement years. Investing for the future doesn’t have to be an anxiety-inducing thought.

If you’re ready to stop losing sleep over whether or not you’ll be prepared for the future, we’d be honored to sit down with you and have a conversation. We’ll get to know you and talk through your dreams for the future. Then, we’ll figure out a plan to help you invest your assets as effectively as possible.

Ready to get started? Call us today!


This material is not intended to replace the advice of a qualified tax advisor, attorney, or accountant. Consultation with the appropriate professional should be done before any financial commitments regarding the issues related to the situations above are made.

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