How Much Money Do You Need To Retire

If you've been a regular visitor to this space, you already know our team at I Was Broke. Now I’m Not. values planning – especially when it comes to dollars and cents. Today, let's dive into a topic that's not just important but downright crucial – calculating the magic number for your retirement. Because let's face it, knowing how much money you need to retire is as vital as sunscreen on a scorching day.

So, let's cut to the chase. How much money do you need to retire? It's not just a rhetorical question. Do you know how much you need?  It’s easy!  Take a mere five minutes – yes, you heard it right – to complete the following two tasks. It's a mini-financial adventure that promises to be worth every second.

TASK 1 - Calculate Your Number

Head over to our tools page and fill out the form! When you do so, you will receive access to several tools, but for today locate the tool: Retirement Nest-Egg Calculator

Within moments, you'll have a clearer picture of the nest egg required to retire in style.

TASK 2 - Face the Question: Are You Going To Retire Well?

Now, armed with your newfound knowledge, it's time for a bit of reflection. Are you on track to retire well? Does your current plan align with your retirement aspirations? This isn't just about numbers; it's about the life you want to lead when your work-life becomes a distant memory.

The challenge is set. Take those five minutes, tackle the tasks, and unlock the door to a future where retirement isn't a question mark but an exclamation point!

Should You Withdraw From Your Savings Prior To Retirement?

The temptation to dip into your retirement savings early can sometimes be alluring. No matter how alluring, you should NOT withdraw early! Here’s why?

1. You lose the opportunity for your money to grow tax-deferred

2. The time value of money is crushed when you pull out the money you have saved for retirement.  You will never get that time back!

3. If you pull money out of your retirement plan early, it will be subject to taxes PLUS a 10% penalty.

4. You will have to recognize the withdrawal as income for that year which will usually bump you up a couple of tax brackets.

5. It is a VERY EXPENSIVE way to obtain money. You will ultimately pay around 45% taxes on the money you withdraw! If you pull out $50,000, you will actually bring home $27,500! Taxes and penalties will cost you $22,500! That is worse than a credit card!

6. Are you viewing this cash withdrawal as a way to avoid more debt? I have seen too many cases where money is withdrawn (very expensively) and without a change in spending behavior. Don’t put yourself in a position to end up with zero or very little in their 401(k) PLUS a pile of debt that increases every month!

7. FINAL REASON: It’s for RETIREMENT!

Retirement plans are designed to secure your future when you decide to retire. Withdrawing early disrupts this purpose and may hinder your ability to achieve financial independence later in life. Instead, consider alternative financial strategies to address immediate needs without compromising your retirement goals..

3 Things Sabotaging Your Retirement

Retirement is a time in life that many of us eagerly look forward to. It's a period when we hope to enjoy the fruits of our labor, travel, spend time with loved ones, and pursue hobbies and interests. However, achieving a comfortable retirement requires careful planning and financial discipline.

Let’s discuss three common mistakes that can sabotage your retirement if you’re not careful!

You Haven't Started Saving

Time can be your most valuable asset in building a substantial retirement fund. The power of compounding allows your investments to grow exponentially over time. When you delay saving for retirement, you miss out on the potential for your money to grow.

Start saving for retirement as soon as possible, even if you can only contribute a small amount initially. Set up automatic contributions to retirement accounts like a 401(k) or an IRA, and increase your contributions as your income grows.

You Haven't Determined Your Retirement Nest-Egg Amount

Having a clear retirement savings goal is crucial for a successful retirement plan. Without a specific target in mind, you may not know how much you need to save or whether you're on track to meet your retirement goals. Determine your retirement nest egg amount HERE! Once you have a target amount, you can create a savings plan to work towards that goal.

You Have Pulled Money Out of Retirement Accounts Early

Early withdrawals from retirement accounts, such as a 401(k) or an IRA, can result in penalties, taxes, and lost potential growth. These accounts are designed to provide financial security during retirement, and withdrawing funds prematurely can significantly derail your retirement savings plan.

Planning for retirement is a lifelong journey that requires commitment and financial discipline. Avoiding common mistakes will help you achieve your retirement plans, hopes, and dreams!