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Will Your Retirement Savings Last? Get a Retirement Checkup

Will Your Retirement Savings Last? Get a Retirement Checkup

September 07, 2021

Trying to pinpoint how many years your retirement savings will last can be tricky. Retirees can use this questionnaire as an informal guide to see if their retirement is on track. Considering you may spend 30 years or more in retirement, it’s important to check your plan periodically to make sure that your savings will last. Gauge how long your savings will last using the questions below.

Score yourself as you go and compare your total score at the end of the questionnaire.

1. What is your withdrawal rate?

A. 2-3% of my savings

B. 4-5% of my savings

C. 6-7% of my savings

D. more than 7% of my savings

Score yourself 

A. 5 points

B. 4 points

C. 3 points

D. 2 points

In finance, we have what's called the 4% rule. The 4% rule: aim to withdraw no more than 4% in the first year of retirement and adjust annually for inflation. If you're withdrawing 4% or less, that's a good place to be. 

2. Have you calculated inflation into your retirements savings?

A. Yes, my savings could withstand a 2-3% inflation increase.

B. Yes, my savings could withstand more than a 3% inflation increase.

C. No, I do not account for inflation when calculating my retirement savings.

Score yourself 

A. 4 points

B. 5 points

C. 1 point

Historically, inflation runs between 1.5% and 4% each year. Due to COVID, these are abnormal times and inflation continues to rise. The Fed raised its inflation expectation to 3.4%, up from its March projection of 2.4%, effectively raising its inflation expectation by 42%.1 Your plan should aim to keep pace with the rising cost of living. 

3. Do you have any debt?

A. No, I do not have any debt.

B. Yes, my debt is under $10,000

C. Yes, my debt is $10-25,000

D. Yes, my debt is over $25,000

Score yourself 

A. 5 points

B. 4 points

C. 3 points

D. 2 points

A record number of older Americans still have mortgages and credit card debt. Paying off debt should be a top priority for anyone worried about late-in-life inflation.

4. Does your retirement plan include guaranteed income?

Yes

No

Score yourself 

Yes 2 bonus points

No

Guaranteed income strategies like annuities can give you a regular cash flow in retirement. Don’t invest unless you know it’s the right product for you.

5. Do you have a long-term care plan?

Yes

No

Score yourself 

Yes 2 bonus points

No

Long-term care expenses are a key risk to your retirement plan. About 70% of Americans over the age of 65 will need long-term care services.Not accounting for a healthcare expenses in retirement could easily eat away at your hard-earned nest egg. 

6. What is your investment strategy? Finish the following sentence: most of my retirement savings is in

A. cash

B. a money market

C. a 401(k) or an IRA

D. other personal investments

E. I have a good mix of several of the above strategies

Score yourself

A. 1 point

B. 1 point

C. 3 points

D. 2 points

E. 5 points

Keeping your assets in cash or a money market account doesn't build wealth, yet 25% of retirees report their retirement assets are in cash. Cash!3  Savers need to take on some risk to outpace inflation. Having personal investments with the right asset allocation is an essential part of keeping your retirement on track. 

Total Your Score

Add the total points from all 6 questions

20-25 - Great! Your plan is in great shape. Stay the course with an annual check-in with an advisor.

10-19 - Good. You're on the right track. Consider generating a more complete plan to give you more confidence.

0-9 - So-So. Consider working with a financial professional. You may find that a little planning can help.

Need help with your plan? Get started with us today!

Disclosure:

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. The material provided is for general information only. The longevity of your retirement is not guaranteed. Securities and advisory services offered through Centaurus Financial, Inc. Member of FINRA and SIPC. A Registered Investment Advisor. Supervisory office: 2701 Cambridge Court, Suite 525, Auburn Hills, MI 48326, (248) 648-8598. WealthMap Advisors and Centaurus Financial, Inc. are not affiliated

Sources:

1. The Wall Street Journal, June 16, 2021

2. US Senate, Commission on Long-Term Care, September 2013

3. Forbes, April 2021