The prospect of retirement can be daunting, with so many questions it can seem overwhelming. How much to save, what benefits you can count on and how much you should spend in your post-income years are all things you need to consider. While they’re all necessary questions, the answers aren’t exactly cut-and-dried, as is often the case with major financial decisions like this. 

                By                    Christian Long

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However, just because there isn’t a one-size-fits-all approach to retirement doesn’t mean there aren’t a number of guidelines to go by that can help steer you in the right direction. Here’s a rundown of some of the numbers you should be looking out for when you start to consider retirement, and how you can better prepare for that big day.

Your Retirement Savings

Along with all the money you’ve (ideally) set aside for retirement, look to all the other assets you have that you’ll want to liquidate and be able to do so relatively quickly. This will give you a set amount that you can begin using to supplement any monthly income that’s still coming in, separate from Social Security. Knowing this number will also help when shaping your monthly budget. 

An oft-cited guideline here is that most retirees spend about 70%-80% of what they previously did while working. This isn’t true for everyone but can help when it comes to planning for the future, regardless of how far off retirement is.

You’ll also want to consider how long you’ll be spending in retirement. While predicting your own lifespan isn’t exactly easy, considering your retirement age in relation to the average U.S. life, which is 79 years. Think about this, along with your own personal health and family history, can all help inform what you should be looking for when it comes to being prepared. 

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Your Monthly Income

When considering retirement, it’s important to look at what income you can receive from Social Security, a pension or any other source of income you can count on once a paycheck is out of the equation. As far as Social Security, that money typically counts as 40% of income for most retirees — and that monthly number can vary greatly depending on what age to decide to retire. 

However, there are some realities you’ll want to consider. It’s projected that Medicaid’s hospital reimbursement fund is projected to become insolvent by 2026 (three years sooner than previously predicted), while Social Security could see a similar fate by 2034. While it’s possible Congress could intervene in both situations, the safest bet is to plan for the worst-case scenario.

Your Credit Score

Should you be in a situation where you’d need to borrow some money, your credit score — as always — will determine how much you’re able to borrow and what kind of interest rate to expect. Of course, the higher the score the better your chances of getting a good deal on any possible loans. Anything below 760 will likely need to be improved, though doing so can be surprisingly easy. 

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Your Debt-To-Income Ratio

If you’re still in debt by the time you retire, it’s important to figure out what debt-to-income ratio you’ll be expecting. An easy way to look at this is to add up all your monthly payments, from rent or mortgage to credit cards to student loans, then divide it by your gross monthly income. The resulting number will be your debt-to-income ratio, which would ideally be 35% or lower. You’ll also want to look at the interest rates on each and reprioritize which ones you may want to pay down as aggressively as your budget allows.

Your Bottom Line

One of the most important numbers to get a grasp on is what your bottom line will be month-to-month. If the money you’re taking in is greater than your expenses, that’s great. However, if you end up in the red, you’ll need to reconsider your budget, look for ways to adjust your income, or (if possible) consider postponing retirement until those numbers start coming back in your favor. 

Another popular guideline is the 4% rule. Basically, look at what 4% of your total savings is, and see if that would be enough to live on (along with other income). If the numbers work out, that 4% is adjusted every year to account for inflation, although it’s being argued that this methodology should be adjusted to the 3.3% rule given the current financial climate.

Of course, if any of this comes across as a little too overwhelming, consider hiring a financial advisor to help make sure you’re as prepared as you can be. 

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