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?
Compounding growth means early investment pays off:
Historically, US stocks have averaged around 10% annualized going back to 19261.
*Annualized average return of the S&P 500. 1926-2013.
Assuming you can realize the historical 10% average, consider these scenarios:
*This assumes you stayed invested through all the ups and downs of the market and took no withdrawals from the portfolio and reinvested dividends.
A $10,000 investment (US Stocks) at age 25 would grow to $452,592 by age 65*
If you waited until 45 to invest the same $10,000, it would grow to just $67,275 by age 652.
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.
The average 62-year-old can expect to be retired for
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?
Funding personal living expenses
Leaving an inheritance to heirs
Making a charitable donation from your estate
How Much Money Will
You Need in Retirement?
Cash flow needs
The average retiree will need
of pre-retirement annual income to maintain his/her lifestyle5
Other income sources
Inflation decreases a dollar's purchasing power over time
Average U.S. inflation rate per year
Yearly living expenses
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.
*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.
30-Year Rolling Periods*
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.
- FactSet, Bloomberg L.P., Global Financial Data, Inc., as of 2/25/2014
- US Securities and Exchange Commission, Investor.gov, Compound Interest Calculator
- Centers for Disease Control and Prevention, US Life Tables (2009), Vol. 62, No. 7, 1/6/2014
- Social Security Administration, Calculators: Life Expectancy
- CNNMoney, Ultimate Guide to Retirement
- US Dept of Labor, Bureau of Labor Statistics, Consumer Price Index (CPI) Inﬂation Calculator
- BuyUpside.com, Inﬂation Calculator
- FisherInvestments.com, 401(k) and IRA Tips and Answers
Interested in more retirement planning advice that you can use right now? If you have a $500,000 portfolio, download our retirement guide called "The 15-Minute Retirement Plan." Even if you have something else in place, this must-read guide includes research and analysis you can use today.
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