The Truth about the Magic Number for Retirement Savings

Trying to simplify your plan for retirement savings with a magic number that works for everyone?

Want to know if a magic number really works as a retirement plan?

Looking for advice from professionals in wealth management in Ann Arbor about saving for retirement?

We understand that planning for retirement is complicated. Really complicated. And it’s actually harder to figure out and more abstract the further away you are from retirement age. That’s where the idea of the magic number for retirement savings comes in handy. Without needing incredibly specific plans for retirement, calculating the magic number allows people to begin a solid retirement fund early in life to setup success and comfort later on.

But the truth about the magic number is that it’s just a rough estimate and can’t take the place of a retirement plan tailored to your life.

What’s your magic number?

The general rule for calculating the magic number is to save ten times your final salary by retirement age, or 67 years. That means if you expect to make $85k/year at retirement, you should have saved $850,000 in a retirement fund.

This is a great place to start, but leaves a lot out of the equation like your precise social security benefit, plans for travel, reduced living expenses if you downsize or move to a less expensive area, or any interest in leaving an inheritance for children.

Because you could end up needing a lot more or a lot less that your magic number depending on how you want to spend retirement, basing your plan on the oversimplified equation is usually not the best route. 

Trust your retirement plan to a professional in wealth management in Ann Arbor

Don’t settle for a retirement savings goal that’s one-size-fits-all. Get a plan tailored to your unique situation, wants, and needs with Imber Wealth Advisors in Ann Arbor. Give us a call today to make sure you’re on the right plan for the retirement you’ve been dreaming of.

Should You Take an Early Retirement Offer?

Are you considering early retirement?

Is your employer putting together an early retirement offer that you’re unsure about?

Want to know if your early retirement offer is worth what you deserve?

An offer of early retirement can sound generous and extremely appealing to an employee who is facing retirement within the next several years. While it can be a great option for some, we have to remember that ultimately an employer’s motivation behind an offer of early retirement tends to be cutting costs and saving money.

So, is early retirement a good option for you? Let’s take a look at some of the considerations you should make when weighing your early retirement offer.

1. Does the offer include medical coverage until you are eligible for Medicare?
With the high cost of medical care these days, make sure you’re considering this expense when you’re looking at the numbers.

2. How does the compensation compare to the amount you would earn as an employee?
Know the precise amount you can expect per year with the offer and compare to the salary you would earn as an employee.

3. Is there a bonus to cover the difference between the offer and the amount you would have earned as an employee?
It’s possible your employer will cover the difference between salary and your retirement offer with a bonus, but make sure you consider any taxes you’d owe on that sum.

4. Is the company experiencing a period of transition?
Think about what’s prompting the offer such as downsizing or merger. 

5. Is the company likely to let you go down the line if you pass on the retirement offer?
If your company is struggling and continues to do so after you pass on an offer, you may end up being terminated without an offer.

6. Will the offer bridge the gap between retirement and when you receive social security?
If your early retirement is several years before social security benefits kick in, compare the offer to your expected benefits and make sure you’ll earn enough to afford retirement.

7. Is there room for negotiation in the offer?
If you think negotiating a better offer is an option, make sure you ask for what you need to be comfortable. But keep in mind that the first offer tends to be the best.

8.  Can your nest egg sustain an early retirement plan?
If the offer falls a little short of what you planned, check the status of your nest egg to see if it can make up the difference.

9.  Are you considering tax or other penalty implications on the offer?
When you’re crunching numbers, don’t leave out any taxes or penalties you are expected to pay on severance, bonuses, and etc.


10. Do you have a high-stress or extremely fulfilling job?
There are costs and benefits to consider that aren’t easily quantified, like the stress or joy you get from your job.

11. Have you discussed the offer with an independent professional in wealth management in Ann Arbor?
Your employer may offer counseling to help you understand your benefits with early retirement, but you should also talk to someone independent from the company so you know your best interest is represented.

Get advice on early retirement from a professional in wealth management in Ann Arbor.

Be confident in your response to an early retirement offer! Discuss all your options and benefits with our team of professionals at Imber Wealth Advisors. We look forward to hearing your story and helping you meet your goals in retirement. Give us a call today.