Are You "Retirement Wealthy"?
The Clark Group Asset Management
Helping you maximize your life through wealth planning.
Are you curious where your retirement savings put you in the rankings?
The numbers below are based on data from the Federal Reserve and Geoffrey Schmidt, a CPA and financial advisor who took the time to do the math.
This will give you an idea of the assets needed to be considered "below average", "middle-class", "well-off", or "wealthy" at retirement age (65). This is a national average, so based on where you live, it may seem different.
One note—these numbers reflect household net worth, not individual net worth:
If you’re reading this newsletter, you’re likely somewhere in the middle class to wealthy category.
No matter which group you’re in, I’m guessing you’re probably wishing you were at least one level higher. It's natural human behavior to always want more...
So, I want to share something you might find helpful if you’re comparing yourself to this list and feeling a little worried:
How much you have saved likely won’t be the biggest factor determining the quality of retirement you enjoy.
People get preoccupied with the size of their nest egg.?
It’s understandable…it’s easily measurable, and it does have a big impact on the options that are available to you when you start planning for retirement. The bigger your nest egg, the more options you have. At the end of the day, healthcare, traveling, education, and a comfortable retirement all circle around the concept of money.
However, assuming you have saved or are on track to save a reasonable amount for retirement by age 65 (these days, I would consider that around $1,000,000, but it really does depend on your expenses and where you live), then ultimately, for you, what will matter most in retirement is not the final size of your nest egg.
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What will matter most is the plan you have to create cash flow from your assets.
I had a client come to me last year with a net-worth of $7mm and he was 60 years old. He wanted to retire in 3 years and sustain his current lifestyle while in retirement. He wanted to spend $50k a year on his country club membership, travel first class on all his family trips, and sustain his fairly hefty mortgage. He also wanted to leave behind a significant amount to his two children and grandchildren. Come to find out, based on his expenses and where he lived (was not even in California!), he couldn't retire until he was 67 based on his current expenses, adjusted for inflation, to achieve his retirement goals. However, if he modified his lifestyle in certain areas, for example downsizing his home or eliminating his country club membership, he could have retired comfortably at age 63.
I had another client come to me, an aerospace engineer in southern California, and they had $1.3mm saved for retirement. They wanted to retire in 5 years from when we met, so at age 68. However, after running the numbers and distribution needs from pensions, 401ks/IRAs, and social security, they actually could retire comfortably at age 65, so 3 years earlier than expected. Why is that? Primarily because their expenses were so low, and their cash flow could supplement a majority of those expenses. They were thrilled.
Having a big pile of money is great, but only if you can successfully turn that pile of wealth into regular monthly income that supports your lifestyle.?Not to mention, in the most tax efficient way.
So, do you have a plan that you can trust?
This is where having a great financial advisor can potentially be so beneficial. Whether it’s tax efficiency, avoiding costly mistakes, or designing a better investment plan, a great advisor will help you get more out of your nest egg.?
Are you confident you’re on track to get the most out of your retirement savings? If not, here is a link to have a conversation with our team so we can learn further about you and see if we can help: