11 Figures You Need to Know for a Secure Retirement

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Editor's Note: This story originally appeared on NewRetirement.

Figuring out if you can retire securely can sometimes feel like the most complicated word problem ever. Just figuring out which retirement number to worry about can be perplexing.

And then there is the further complication of knowing how they all fit together.

Here is your guide to the most important retirement numbers.

1. Your break-even Social Security age

Social Security payments
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You probably know that the later you start Social Security, the higher your monthly benefit will be. Even so, a lot of people start taking their benefit checks as early as possible.

They think that the additional years of collecting benefits will make up for the additional money later on. However, most people will earn more during their lifetime if they wait to start the benefits until later.

One way for you to figure out the best time for you to start Social Security is to figure out your break-even Social Security age.

You can figure out your break-even Social Security age with this calculator. You compare the total benefit you would receive from starting at one age to the benefit from starting at another age. Where the lines cross is your break-even age.

If you think that you will live longer than your break-even age, then you would be better off delaying the start of your benefits till later.

2. How long you will live

Stressed man in retirement
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Another important retirement number is knowing how long you will live. As you saw above, knowing your life expectancy will impact your decisions about Social Security. It also is a big determining factor on how much savings you need for retirement.

Of course, no one can really predict how long they will live. However, there are some good longevity calculators that can help you make a relatively good prediction — though you may just want to add five or 10 years to any estimate just in case!

3. How much monthly guaranteed lifetime income you have

A worried senior black woman sits on her couch
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Guaranteed lifetime income — money that you will receive every month (no matter what) for the rest of your life, no matter how long you live — is the real secret of financial security.

In fact, retirees who report having guaranteed income that exceeds their spending also report less stress and an overall happier retirement.

Common sources of guaranteed lifetime income include: Social Security, some pensions and lifetime annuities — add them all up to get this important retirement number.

Many retirees who have adequate savings buy a lifetime annuity to insure their retirement income. You can estimate how much guaranteed income your savings could buy or how much desired income would cost with an annuity calculator.

4. Inflation outlook

Senior woman with no money
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Inflation is an economic concept that describes the gradual increase in prices. If inflation is rising at 7% annually, then something that costs $100 today will cost $107 a year from now, $114.49 in two years, and so on.

Inflation can be less noticeable when you are working because your salary generally keeps pace with the increases in costs. However, inflation in retirement — when you are living off a fixed set of assets — is a whole other matter. You have a fixed amount of money that can buy less every year.

Here are some quotes that describe the dangers of inflation:

  • “Inflation is when you pay fifteen dollars for a ten-dollar haircut you used to get for five dollars when you had hair.” — Sam Ewing
  • “Inflation is as violent as a mugger, as frightening as an armed robber and as deadly as a hit man.” — Ronald Reagan
  • “Inflation is the crabgrass in your savings.” — Robert Orben

Predicting inflation is an important component of preparing for retirement. The NewRetirement retirement planning calculator enables you to make your own predictions about inflation, and easily change them to see the impact on your finances now and well into your future.

You can even put one number for general inflation, another for housing inflation and yet another for medical costs, which have been rising much faster than those for other services. This can greatly increase the accuracy of your retirement planning.

5. Rate of return on investments

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If you have retirement savings, then knowing how much that money will earn for you is important to assess as well you can.

Ideally, you are earning a rate of return that is better than average. But the rate of return varies greatly depending on the time period you are looking at, as well as the type of investment.

The NewRetirement retirement planning calculator lets you enter a rate of return for each individual account — you can even put in both an optimistic prediction and a pessimistic one. It is easy to change and immediately see the impact on your financial well-being.

6. Out-of-pocket health care costs

An older woman wears a face mask in the park during the coronavirus
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This number is easy — if you want to go with averages and the opinions of various experts in the field.

According to Fidelity’s Retiree Health Care Cost Estimate, a 65-year-old couple who retired in 2021 needed an estimated $300,000 to cover health care costs in retirement.

And, this does not include any money that may need to be spent on a long-term care needs.

7. Estimated monthly retirement spending

Seniors planning for retirement
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Knowing how much you will spend is another critically important retirement number. The more you will spend, the more savings and income you will need.

There are various ways to predict your spending. Different experts have different suggestions for figuring out your spending. Some say that you will spend:

  • 85% of what you spent while working.
  • The same as you spent while working.
  • More when you first retire, then less as you grow older.
  • Much less in retirement, because you dramatically cut costs to make ends meet.

Which answer turns out to be closest depends on your habits and preparations.

8. How much your home is worth

Senior couple making financial plans
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Many 50-, 60- and 70-year-olds today have put more effort into buying a home and paying their mortgage than they did on saving for retirement. As such, their homes are an important source of retirement wealth.

More and more retirees are downsizing or getting a reverse mortgage as a way to use their hard-earned home equity to fund retirement. You can use the NewRetirement planner to see the impact of tapping into your home’s value.

9. How much you have saved

Happy seniors
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This should be easy. How much do you have saved for retirement?

The trickier part is knowing how much those savings will be valued in the future.

When will you make withdrawals, and for how much? What kind of rate of return will you get? Will you add anything to your savings?

10. Your retirement age

A black senior man drives a forklift at work
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Retirement age used to be 65 for many people. These days we often aren’t even sure exactly what “retirement” means anymore.

So many more people are quitting their job only to get another career or part-time gig. Other people are phasing out by going part-time for a while. And retirees are more active now than ever before.

You might be able to define your retirement age as when you stop earning income from work. But, then we get into the definition of “work.” Many people these days have side hustles and passive income sources.

So maybe the new idea of retirement age is the age at which you need to start really relying on withdrawals from savings to make ends meet.

11. How much savings you need for retirement

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This is the retirement number — the question that everyone wants answered.

Of course, the answer to this question depends entirely on your answers to all the other questions. And, the best way to get a reliable answer from this jumble is to use a good retirement calculator — one that is detailed and that can be completely personalized.

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