William Huyler Shares How To Be Prepared For Retirement

Many people are confused about how they should structure their retirement investments. There are many conflicting sources of information on this topic, and the average investor may not know where to turn in order to properly make their financial plan.

While two-thirds of workers in the U.S. are confident that they will be able to maintain a comfortable lifestyle in retirement, only 42 percent have actually sat down and made retirement calculations. Even fewer people have tried to determine how much money they will need for increased medical expenses.

William Huyler, an experienced financial advisor, explains the “magic number” for retirement planning and how the everyday investor can use this information to enhance their portfolios.


  • What is the “Magic Number”?


The “magic number” refers to the amount of money that a retiree needs to be able to withdraw from their accounts each year without running out of money. Generally, people are taught that 4 percent is the amount that you can withdraw each year without running into financial trouble. 

You will need to adjust your investments to provide you with a livable income at just 4 percent of your retirement savings. Many people will find that they have not saved enough when they use this benchmark to look at their retirement savings. For example, if you have $500,000 in a retirement account, you can only withdraw $20,000 each year in accordance with this rule. This may not be enough money to live on, depending on your lifestyle.

The chance of running out of money during retirement is one of many people’s greatest fears. You can maximize your chances of making it through retirement with money to spare if you have a solid plan.


  • Alternative Strategies


Many financial advisors balk at providing a “magic number” because they do not want to be held legally responsible if the investor does not have enough money when they retire. It is understandable that they would want to give more general advice in this situation.

Another “magic number” that you should keep in mind is 10 percent. You should always be saving a minimum of 10 percent of your salary toward retirement. This becomes easier if your employer matches contributions to your 401(k). If your employer does not match contributions, you will need to shoulder the burden yourself. If you are investing 10 percent each month in retirement starting at a relatively young age, you will easily build the nest egg you need to retire at the income level you want. 


  • Adjusting the “Magic Number”


Especially if you are approaching retirement, you may be extremely nervous that you will not have enough money to survive your old age. You may need long-term care, and you may have to sell your home in order to afford it.

You may also need to support parents or children while you are in your retirement years. You should plan for this eventuality if you have children who are approaching college age or if you know that your parents are likely to be financially vulnerable or in ill health as they age.

In these cases, you will need to adjust the commonly held “magic number”. If you are saving for retirement starting at age 45, you will need to save about 35 percent of your income in order to make it. This can be a daunting figure to match, and most retirees will not be able to achieve it.


  • Taking Rising Expenses Into Consideration


Many people do not plan for future price hikes in medical care, long-term care, and the basic necessities of life. When doing long-term planning, it is a good idea to run some numbers with the help of your financial planner and see what the changes in these demands could be over time.


  • Making it Easier to Save for Retirement


When possible, it is a great idea to automate retirement savings. If you set up automatic deposits to your retirement accounts, you will not “see” the money or include it in your monthly expense budget. Having an automated savings plan is also a good idea where cash savings are concerned.


  • Understanding How to Save for Retirement


Financial advisors like William Huyler want the public to know that they should be saving for retirement immediately upon entering the workforce. Starting at age 22 to 25 is ideal. If for some reason you cannot begin saving at this young age, you will need to contribute a greater proportion of your annual income to your retirement savings.

When retirement is near, many people feel nervous that they will not be able to afford to keep up their accustomed lifestyles. While it is true that many people will not have enough money to live comfortably in retirement without making serious changes to their financial planning, all hope is not lost.

Skilled financial advisors like William Huyler are able to sit down with future retirees and go through their family budget, assets, and debts. Using this information, they will be able to produce a workable retirement savings plan that should protect them into their golden years. 


Disclaimer: This content does not necessarily represent the views of IWB.


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