Since starting work, you’ve been encouraged to save for retirement. Even though retirement seemed so far away, your HR contact gave you paperwork to fill out regarding the employer-sponsored retirement savings plan.

At one time, pension plans were the only option. Then as employees no longer stayed with the same employer for their entire career, portability of retirement savings became important. That’s when defined contribution plans (e.g., 401(k), 403(b)) grew in popularity. These employer-sponsored retirement savings plans allowed you to contribute money. And if you left that employer, you could take your retirement savings with you.

It was the late 90’s and I worked for a subsidiary of Northern Trust. The subsidiary focused on defined benefits and defined contribution plans. During that time period, I watched the defined contribution business grow significantly as the defined benefits side shrank in size. You may have experienced during that time having paperwork from HR about your pension plan being frozen and option to participate in the new defined contribution plan.

So, you’ve worked and saved diligently and find yourself only ten years away from retirement. Are you on track to saving enough money for retirement? Will you outlive your savings?

The answer is …. “it depends.”

It depends on a lot of factors – your retirement lifestyle, inflation, market risk, changes in family needs (e.g., adult child needs to move in temporarily or elderly relative needs caregiving), health care expenses, long-term care needs … and the list goes on. With so many unknowns, it’s normal to feel overwhelmed when planning for retirement.

It would be easier if there was a crystal ball to give a definite answer … but unfortunately, technology has not created that option yet. However, we do have many models to run “what if” scenarios to give some comfort in whether you’ve saved enough money. But as the disclaimer on any report will state, “Assumptions made are for illustrative purposes … there is no guarantee that results shown in the analysis will be achieved and actual results may deviate from those reflected in this analysis.”

But the very first step before running any calculation is for you to define how you envision your retirement lifestyle. It’s common for many couples to have different perspectives and that’s why the conversation needs to happen sooner rather than later.

Ten years before you want to retire is an ideal time to start this process. It gives you time to resolve any differences and manage your expectations if you haven’t saved enough for your retirement lifestyle. You may need to work longer and/or spend less money.

For my clients, I use the 5 P’s of Life (personal relationships, personal finance, profession, peace of mind, and physical health). By talking about each of these aspects of life, I have a better understanding of what they envision for their retirement lifestyle. I uncover if they live a healthy lifestyle and their family health history. This information is vital when estimating health care expenses and long-term care expenses.

To figure out what your retirement lifestyle will look like start with how you are spending money now. Then identify which expenses will change in retirement. Look at your home expenses, food, entertainment, etc.

Retirement will span at least 30 years for most people. During that time period, your mobility will change. Think of retirement in three stages: very active, moderately active, and not active.  This concept will help you identify how your retirement lifestyle will evolve and how your expenses will change. For example, money spent in entertainment during your early retirement years will shift to health care as your mobility changes.

Planning for retirement can be overwhelming with many unknowns about the future. But it doesn’t have to be. Start with understanding how you spend money now. Then adjust your spending for your retirement lifestyle. Once you define how you envision your retirement, then it’s easier to calculate how much you will spend in retirement. Having this number will be the basis for running many calculations to determine if you’ve saved enough or if you need to make adjustments.


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Niv Persaud, CFP®, CDFA™, CRPC®, is the Founder of Transition Planning & Guidance, LLC. Life is more than money. It’s about living the lifestyle you want and can afford. For that reason, Niv consults with clients on money, life, and work. Her approach capitalizes on techniques she learned throughout her career, including as a management consultant, executive recruiter, and financial advisor. Her services include spending plan, financial plan, divorce financial review, life strategy, and professional progression. Niv actively gives back to her community through her volunteer efforts. She believes in living life to the fullest by cherishing friendships, enjoying the beauty of nature and laughing often — even at herself. Her favorite quote is by Erma Bombeck, “When I stand before God at the end of my life, I would hope that I would not have a single bit of talent left and could say ‘I used everything you gave me’.”