4 Questions to Help With Retirement Planning: Infographic

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4 Questions to Help You Plan Your Retirement

Planning your retirement can be complicated and confusing, but here are some key questions that can help you develop a retirement strategy and avoid some potentially costly mistakes.

When Are You
Planning to Retire?

Time until retirement is a critical starting point to planning your retirement strategy. The sooner you can start retirement planning, the better.

Compounding growth means early investment pays off:

Historically, US stocks have averaged around 10% annualized going back to 19261.

Beginning of year
End of year
*Annualized average return of the S&P 500. 1926-2013.

Assuming you can realize the historical 10% average, consider these scenarios:

Scenario 1:

Scenario 1 of compounding interest for retirement investments

A $10,000 investment (US Stocks) at age 25 would grow to $452,592 by age 65*

Scenario 2:

Scenario 2 of compounding interest for retirement investments

If you waited until 45 to invest the same $10,000, it would grow to just $67,275 by age 652.

*This assumes you stayed invested through all the ups and downs of the market and took no withdrawals from the portfolio and reinvested dividends.

What's the Time Horizon for Your Retirement Savings?

The age you retire, your life expectancy and your goals for the assets during and after your life are key factors in determining the time horizon for your investments, or how long you will need your savings to provide for you.

Life Expectancy

The average 62-year-old can expect to be retired for
Icons illustrating the average life expectancy for those near retirement

But 1 in 4 65-year-olds will live beyond 904

So your retirement assets might have to last

What's the primary goal for your retirement
savings during and after your life?

Possible retirement savings goal: funding personal living expenses

Funding personal living expenses

Possible retirement savings goal: supporting dependents

Supporting dependents

Possible retirement savings goal: leaving an inheritance to heirs

Leaving an inheritance to heirs

Possible retirement savings goal: making charitable donations from your estate

Making a charitable donation from your estate

Possible retirement savings goal: some combination of other goals

Some combination

How Much Money Will
You Need in Retirement?

There are a number of factors that can influence your investment needs during retirement, and ultimately play a big role in determining your retirement strategy.

Cash flow needs

The average retiree will need
Chart illustrating average percentage of pre-retirement income needed for retirees
of pre-retirement annual income to maintain his/her lifestyle5

Other income sources

Sources of income during retirement: social security, pensions and other investment income


Inflation decreases a dollar's purchasing power over time

Average u.s. inflation is 3%

Average U.S. inflation rate per year

Yearly living expenses

Chart showing yearly living expenses for retirement

But watch out: Prices for some goods and services such as health care can vary dramatically6,7,8

What's the Appropriate Investment
Asset Allocation for You?

A successful investor has to make trade-offs between retirement needs and the market volatility they are willing to take on. The following chart can help you understand the tradeoffs between return and volatility with different combinations of stocks and bonds over time.

30-Year Rolling Periods*

Chart showing the tradeoffs in asset allocation to consider for retirement
*The rolling period calculations measure the average annualized rate of return of every 30 year period between 1926-2013. Rolling periods are useful in examining the return behavior for holding periods similar to those actually experienced by investors.

There's no "one-size-fits-all" solution to retirement planning. Click here to find out how we can help you achieve the comfortable retirement you've been working and saving for.

  1. FactSet, Bloomberg L.P., Global Financial Data, Inc., as of 2/25/2014
  2. US Securities and Exchange Commission, Investor.gov, Compound Interest Calculator
  3. Centers for Disease Control and Prevention, US Life Tables (2009), Vol. 62, No. 7, 1/6/2014
  4. Social Security Administration, Calculators: Life Expectancy
  5. CNNMoney, Ultimate Guide to Retirement
  6. US Dept of Labor, Bureau of Labor Statistics, Consumer Price Index (CPI) In?ation Calculator
  7. BuyUpside.com, In?ation Calculator
  8. FisherInvestments.com, 401(k) and IRA Tips and Answers

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Investing in securities involves a risk of loss. Past performance is never a guarantee of future returns.
Investing in foreign stock markets involves additional risks, such as the risk of currency fluctuations.