How much money will you need to fund your Lifestyle in Retirement?

You know what, this is most probably something you have not given much thought too or you have chosen to avoid the question completely.

I get it, life is so busy and you have so many other competing commitments, for most this is the last thing most people think about.

But, you know what, the earlier you address this question and take action, the easier it will be.

Nevertheless, at some point in time, you are going to need to hit this question head-on or you will not have an enjoyable retirement.

I see it a bit like someone saying they want to get fit, however, they keep avoiding the deep issues that are stopping them from getting fit.  Years down the track they are still not fit sitting there wondering why they are not fit.

It’s the same with most people when it comes to planning their retirement.

Let’s be honest at some time in the future it is going to happen.   It could be forced upon you or you could be one of the responsible ones who has taken the necessary steps to put themselves in a position to make the decision on their own account.

Remember everyone is different and one’s retirement is not going to be the same as the person next to you.

Not knowing your number is getting in the way of you achieving your ideal lifestyle in retirement.

We will give you some guidelines to calculate your number which will form the foundation for you setting a path to achieving that number and living your ideal life.  Sound good?

You’re most probably sitting there wondering what I’m talking about, right?

It’s a common problem I find, particularly in new clients.  They come in sometimes not very clear on what it is their future looks like, what their desired lifestyle looks like.

Or they might have an idea but don’t know what’s required to achieve that lifestyle.

So, what do I mean by your number?  Sometimes known as Financial Freedom Number.

Simply, the dollars you require to fund your lifestyle without having to rely on employment or business income.

However, for some, income from employment will form part of their income in retirement as they choose to remain employed and contribute to society.

Why does such a number matter?

It’s the end goal; whether you know it or not, we are all aiming for that freedom to live the lifestyle we want on our own terms.

That equates to a financial number.

Living that ideal lifestyle means different things to different people.

For some, it’s the ability to have a passive income coming in that funds their day to day lifestyle, fund regular holidays, help out the kids, update cars on a regular basis and ultimately not having to think about money.

You know it’s there when you need it.

You may be someone that has no intention of retiring and this is not about that, it’s about putting yourself in a position where you have options.

For me, I know my number, there’s the day to day lifestyle stuff to fund, upgrade of the house, funding children’s education, regular overseas travel and a few luxuries here and there.

Will that mean I will stop working when I get to that number?  Most probably not, I love helping people achieve their dreams too much and I really don’t see it as a job, I just enjoy doing what I do.

So, how do you calculate your financial freedom number?

1) What regular income do you require to fund your day to days expenses, the lifestyle you want?

To keep it simple divide that number by 4.  Why 4?  It’s the amount that you will be able to regular withdraw each year indefinitely.  As I said where keeping it simple here.  There are obviously other factors involved such as whether you want to leave a legacy, inflation and expected returns but it will give you a ballpark number.

2) Are you looking to do regular travel?  If so what are the expected annual costs?

3) How often are you looking to upgrade cars?  How much is this going to cost?  What’s the estimated cost over your lifetime?

4) Are you looking at helping out children and grandchildren financially?  Add that to the amount as well.

5) If there are other big outlays not included about that you are looking to spend, add those in too.

What you will come up with is a financial number that will give you clarity what’s required to fund your ideal lifestyle without working.

If you enjoy your work and want to continue that’s fantastic, continue working.

Once you reach this number, you’ll have greater freedom around what you do.

What do you do with this number?

Now it is time to work out where you are in relation to this number.

What are your current assets?  Don’t include personal assets like cars, residential home and personal assets.

Do include superannuation, investment properties (less debt), the value of a business and any other assets that are destined to fund your future lifestyle.

This will give you the gap that you will be looking to fill over time.  It gives you the information you need to make decisions about what is required to get you to that financial freedom number.

You are now armed with the most vital information.  It’s now a matter of determining what strategies you need to implement to bridge the gap.

This little exercise will help you clarify what is required, arming you with the ability to create your own roadmap and finally live your ideal lifestyle in the future free from money worries.

Hope that’s been useful.

P.S.  We are in the close to releasing a worksheet to help people define their number.  If you are interested feel free to drop me a line and I’ll make sure you receive a copy when it is ready.

Glenn “helping people achieve financial freedom” Doherty

Want a copy of our Super Strategy e-book – 11 strategies to help you build your retirement fund faster CLICK HERE.

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P.S. At Jigsaw Private Wealth we help motivated people create their own script to their life story.  We apply the tried and tested roadmap and strategies that give you the simplicity & clarity you’re looking for.  As a result of our work, you can spend more time concentrating on the important stuff such as more time with family, friends and work.  Living life knowing you don’t need to stress about money.

When you’re ready here are three ways we can help:-

1. Get A Straight Answer – In a 15 min Breakthrough Call I’ll identify your biggest 1-3 financial issues stopping you from achieving financial freedom, tell you where you may be heading down the garden path, and give you at least one strategy to check out.  When you’re ready send us an email and we will set up a time.

2. Jigsaw Roadmap Strategy Session – I have a framework for helping clients put together a complete financial roadmap in an hour. It’s simple; you come prepared to tell me clearly the financial outcome(s) you want, we stocktake where you’re at now, and together we identify the right strategies to close the gap between the two fast. You walk away with a complete action plan to reach and achieve your ideal lifestyle with more certainty and less stress.  When you’re ready, reach out and we’ll book in a time.

3. Work with me – If you’ve read and heard enough and you’re ready to get on with it, email me back with “I’m interested” and I’ll give you the details on how to become a client of mine and take charge of things.

Make it a Great Life!

Glenn Doherty – CFP – Founder & Financial Organiser at Jigsaw Private Wealth

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Advice Disclaimer: Any reference in this publication to the provision of advice refers to advice of a generic nature, and should not be taken as product or investment recommendations. Before any action is taken based on the information provided, independent financial advice from a licensed financial adviser should be sought. Financial Freedom Project Pty Ltd ATF GA & DC Doherty Family Trust Trading as Jigsaw Private Wealth is a Corporate Authorised Representative of Exelsuper Advice Pty Ltd. The information contained in this publication is of a factual nature only and is not intended to constitute financial product advice. Information is current as at date of publication. This is an online information blog. It does not imply an offering of securities.