Insider Jeff Fleming

One Size Doesn't Fit All

When it comes to retirement planning, there's no one-size-fits-all formula to ensure a comfortable future. This week, Jeff shows you why the only way to plan is to do the math! Plus advice on drawing down an IRA.

Dear Jeff:
My husband and I are in our late 40s and are empty-nesters. We are sitting on $200,000 in liquid funds. Is there a rule of thumb on how we should judge the amount to be allocated to retirement?

Jeff Says:
If retirement is your primary concern, then I would highly recommend that you analyze your retirement income needs. Determine where you are now financially and how much additional money that you need to accumulate to provide a sufficient income through your retirement years.

Most important, you want to ensure that your money does not expire before you do. Don't forget that you need to add inflation into your calculations. Inflation will require that you increase your monthly income on an annual basis to maintain your purchasing power. You can find a lot of retirement calculators on the Internet that can help you in this endeavor, including ours.

This retirement calculation should dictate how much of your current savings you allocate towards retirement. It certainly is a little more complicated than just using a rule of thumb.

Drawing Down an IRA