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How much money will you need to retire?
Financing Retirement, Retirement Planning

How much money will you need to retire?

Your living expenses today — and how much you expect to spend in future years — dictate how much you’ll need to save for a comfortable retirement.

One common retirement savings rule of thumb is to aim for a retirement income that’s 80% of your working income at the time you retire if you want to maintain the same lifestyle.1 If you earn an annual salary of $75,000, for example, your goal would be for a $60,000 yearly income during retirement.

But rarely do one-size-fits-all guidelines apply to every situation. Your preferred lifestyle and your retirement goals will play a huge role in determining your monetary needs. So before deciding on a set figure, consider these five factors:1

  • Expected expenses: Is your home paid off? Are your local income tax and property tax rates high or low? You also need to anticipate healthcare costs, as they tend to add up quickly. If you have pre-existing health conditions that require regular treatment, these costs must also be factored into your future.
  • Lifestyle: When you’re retired, every day is Saturday. Some people plan to travel during retirement. Others want to pursue new hobbies. You may even be home more than when you were working, in which case you’ll likely spend more on utilities. No matter what, it’s going to cost you money. Pay attention to the cost of living in your community, and factor in what you will need to cover any additional activities you want to participate in.
  • Inflation: Inflation can shrink the value of your money in the future. Your fixed income at 65 may not have the same purchasing power when you’re 85.
  • Longevity: People are living longer and spending more time in retirement. In fact, the average life expectancy increased five years between 2000 and 2015 — and continues to grow.2 If you’re in excellent health and have many relatives who lived well into their 90s, you might want to aim for extra retirement funds so you don’t risk running out of money.
  • Risk tolerance: If you can handle some risk, you may consider a more aggressive investment strategy to grow your savings. But if you’re risk-averse, you’ll want to be more conservative in your savings approach — and plan accordingly when it comes to projecting investment returns. Before making any decisions, you should always consult with a financial professional.

Reverse mortgage loans: Using your home equity to fund retirement

When it comes to retirement savings, there are no guarantees. And even with meticulous planning, saving and investing, you or your loved ones might still find there is not enough money put aside to give you financial security. A government-insured* reverse mortgage, also known as a Home Equity Conversion Mortgage (HECM), may be a viable solution.

A reverse mortgage loan is a unique type of loan for homeowners 62 and older that lets you convert a portion of your home equity into cash or a line of credit. The amount available generally depends on four factors: your age, the current interest rate, the home’s appraised value and government-imposed lending limits.

Government-insured* reverse mortgages offer many benefits compared to a traditional mortgage:

  • You can continue living in your home, and you retain title to it.
  • You can refinance your existing mortgage with a loan that can drastically reduce or even eliminate the monthly expense of principal and interest payments.
  • As with any mortgage, you must meet your loan obligations: keeping current with property taxes, homeowner’s insurance and any homeowner’s association (HOA) fees, and keeping your home in good condition.
  • Your Social Security and Medicare benefits are not affected.1
  • You and your heirs are not personally liable for any portion of the mortgage debt that exceeds the value of your home, even if your home value decreases.
  • Any remaining equity after the reverse mortgage is paid off belongs to you or your heirs.

Find out more about reverse mortgages and how they work.

Taking control of your future

Planning for your retirement lifestyle doesn’t have to be stressful — especially when you have options. At Reverse Mortgage Funding LLC (RMF), we can help you prepare for a financially secure future. To find out more about reverse mortgages, call 888-277-1567 for a convenient phone appointment with a licensed reverse mortgage specialist.

1Not financial advice. Consult a financial professional.

2Global Health Observatory Data, World Health Organization, 2017.