It’s never too late to do the best you can with what you have to work with.
The first place to start is to determine what it will take to financially support the life you want for yourself, what you realistically can attain and what adjustments you need to make to be successful at it.
Instead of looking at what you have available to provide income, begin by determining the amount of income you will need. Once retired some expenses may decrease such as paying for social security and Medicare, travel expenses to and from work, and others. But once you stop working not only will you not be earning an income but you will also have forty or more hours on your hands. What will you do with that time and what will it cost?
Once you determine the amount you need coming in to be comfortable, then it is time to determine what it will take to get you there. What do you need? What do you have in place now to provide for it? What is the shortage? And what is in your control to make up that shortage?
For example, if you plan to retire at age 65 and you need $3,500 per month income and estimate social security will provide $1,200/month. That leaves a shortage of $2,300/month. Consider the following:
$27,600/year ($2,300/month x 12 months) is the amount you need your retirement portfolio to provide.
A general rule of thumb for how much you can expect your investment savings to provide is approx. 3.5% per year. This, of course, depends on your portfolio allocation and other factors. $788,000 x 3.5% = $27,580 you can withdraw from this portfolio annually and reasonably expect your income to last the rest of your life. How reasonable is it that you can build a $788,000 portfolio in the fifteen years?
What are your options?
- Change your retirement date to a few years later to allow more time to save and to let the amount of your social security benefit increase.
- Change jobs to something part time so you can partially retire for awhile until you can afford to fully retire.
- Lower your retirement income goal.
- The best option may be to get really serious starting now and save as much as you can every week.