The 3 R's of a Successful Retirement Transition: Resiliency, Resourcefulness, and Renaissance Spirit. Individuals and retirement planning experts alike are recognizing that a successful and satisfying retirement experience depends on more than a healthy nest egg.
We call them the four pillars: health, family, purpose and finances.
Key Takeaways
A four-phase model for retirement consists of pre-retirement (age 50 to 62 or so), the early period of retirement (age 62 to 70), middle retirement (age 70 to 80), and late retirement (80 and up). Each phase has its own unique priorities.
Retirement is the phase of life in which you transition out of the workforce and into your golden years. Though retirement can come at different times and in different ways for everyone, it generally includes many of the same types of experiences across the board.
Rules of thumb for sustainable withdrawal rates
You take 4% or 5% of your portfolio every year no matter what. You don't adjust for inflation or market performance. Say you choose 5% and have a starting portfolio of $1 million. If the portfolio falls to $800,000, your annual withdrawal drops from $50,000 to $40,000.
Retiring in your mid-60s still makes sense for many people. At this point, you are old enough to have hopefully amassed sizable savings, but you are still young enough to enjoy active pursuits such as travel.
The 4% rule assumes a rigid withdrawal rate throughout retirement. Retirees take out 4% in the first year of retirement. After that, they adjust their annual withdrawals by the rate of inflation (or deflation). As Bengen noted in his paper, however, dynamic withdrawals give retirees significant flexibility.
One of the golden rules of retirement savings is to always try to prioritize taking the full amount of your employer match. For example, if your employer matches dollar for dollar your first 4% of 401(k) contributions, you should strive to put at least 4% into your 401(k).
Rule of thumb: "Save 10% to 15% of your income for retirement."
Australia. Australia has a relatively conservative and mandatory retirement saving system for its citizens, which requires them to put away 9.5% of their salaries every year into a private/public 401(k) called a superannuation account. This amount will be raised to 12% between 2021 and 2025.
One FERS date, June 30, is not only at the end of the month, but also the end of a leave period. This is a particularly good date, because it allows for one last accumulation of annual leave to create a larger lump sum payout.
The 7 percent rule is a retirement planning guideline that suggests you can comfortably withdraw 7 percent of your retirement savings annually without running out of money.
But the last five years before your intended retirement date may be the most important. That's because things can change, whether that's your job, family situation, or your own goals. At this point, you'll know whether you're on track and if retiring is still an option.
For many retirees with modest post-retirement spending plans, balanced investment strategies and full Social Security benefits, $500,000 may last the entire length of retirement.
Using our portfolio of $400,000 and the 4% withdrawal rate, you could withdraw $16,000 annually from your retirement accounts and expect your money to last for at least 30 years. If, say, your Social Security checks are $2,000 monthly, you'd have a combined annual income in retirement of $40,000.
A helpful cost of living benchmark prepared quarterly by the Association of Superannuation Funds of Australia (ASFA), shows an average single person needs approximately $595,000 in superannuation before retiring, while a couple requires around $690,000.
For people working in knowledge-based jobs, a retirement age in the 70s is reasonable from a cognitive perspective, too, said Lisa Renzi-Hammond, director of the Institute of Gerontology at the University of Georgia. “Our cognitive faculties we're able to maintain, usually, pretty well into our 70s,” she said.
Is there really a better time to live in Australia!? December is probably also the most common time in the financial year to retire, too.
So, how much does one need to retire in comfort? If you're single, you'll need more than $500,000, assuming you own your own home, according to the Association of Superannuation Funds of Australia Retirement Standard. That figure is worryingly higher than the average super balance.