‘Is this enough?’ I have a retirement plan in place, but I’m unsure if it will sustain me. How can I ensure financial security in my later years?

Hi Money Minder,

So, I’ve been crunching some numbers and if I keep maxing out my Roth IRA until I’m 65, it should be around $1.8m. I also have the option to contribute to a 401(k) and all that jazz. But, according to one of those online calculators, if I withdraw $70,000 each year from that $1.8m, it should last me 25 years. The big question is, is this enough?

I’m not looking to be rolling in dough or driving fancy cars, just want to be able to maintain my current lifestyle. Right now, our household income is around $70,000, and we’re doing just fine. I mean, logically speaking, it should be enough, right? Everything should be covered – house paid off, health insurance sorted. But I just wanted to get a second opinion. What do you think?

Just to clarify, I know I could potentially earn more in retirement, but I’m just trying to figure out the absolute minimum I need to make sure I’m set. Even if things get tough, I want to ensure I’m still putting money away every month.

Farewell from the author,

Rainy Day Saver

Response from THE MONEY MINDER:

Hello There,

Congratulations on making a proactive effort to plan for your retirement! It’s great that you are thinking ahead and considering your financial future. Based on the information you’ve provided, it seems like you are on the right track with your Roth IRA contributions and potential 401(k) savings. Your goal of having $1.8 million in your Roth IRA by the time you are 65 is a significant achievement and should provide you with a solid foundation for retirement.

In terms of whether $1.8 million will be enough for you to maintain your current lifestyle and cover essential expenses, it appears that you have already done some thoughtful calculations. Withdrawing $70,000 per year from your retirement savings for 25 years does seem like a reasonable plan, especially since you mentioned that your household currently operates on that income level, and your major expenses such as housing and health insurance are taken care of.

While it’s always good to aim for additional savings and a comfortable retirement, it’s commendable that you are considering the minimum amount needed to sustain your regular life. It’s important to focus on your priorities and determine the essentials that will allow you to live comfortably in retirement. Remember, you can always adjust your savings goals and contributions as your financial situation changes over time.

In conclusion, it appears that you have a sensible approach to retirement planning, and your diligence in contributing regularly will certainly benefit you in the long run. Keep monitoring your progress, reassess your goals periodically, and make adjustments as necessary to ensure financial stability. All the best from THE MONEY MINDER in your journey towards a secure and fulfilling retirement.