‘I fear that between the two of us, that’s not enough.’ We want to quit working in 10 years, but only have about $175K saved. Do we need professional help?

Question: I’m 54 years old and have an IRA account with $27,000 in it, but it’s been decreasing over the years even though I contribute $100 per month. I have the funds allocated between mid-cap value funds, core-plus bond funds, investment funds and smart retirement funds. The recent market conditions have not affected my account a great deal, but I’m wondering if I should consider a reallocation of the funds since I’m losing money? I would really like to ramp up my retirement savings since I plan to retire in 10 or 11 years and would like to have enough saved. My husband currently has a 401(k) through his employer that offers a company match and he has about $150,000 saved, but I fear that between the two of us, that’s not enough. I’ve been considering talking to a financial adviser, but would that even help? (Looking to hire a financial adviser too? This tool can match you with one who might meet your needs.)

Answer: First of all, kudos to you for taking charge of your retirement and not waiting until it’s just a few years away. Knowing how much you need for retirement is multi-factored: It’s not just about how much you saved, it’s also about knowing how much you will spend on a monthly basis. “Typically, people need around 70% to 80% of the pre-retirement income in retirement to maintain a lifestyle,” says certified financial planner Spencer Betts of Bickling Financial Services. And that number can drop even more if you have paid off mortgages or plan to move to a place with a lower cost of living and lower property taxes. “Once you figure out how much it costs to live, the next step is to know how much you will be receiving from Social Security and any pensions. Depending on your current income, Social Security can replace 25% to 60% of your income in retirement,” says Betts. 

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Once you know how much income Social Security will replace, you can determine how much income you will need to withdraw from your retirement accounts to give you enough to live on. And when you figure that out, you can see roughly how much you’ll need to save to produce the amount of income on an annual basis. “A good rough estimate is the 4% rule — your investments can produce 4% income on an annual basis, so for every $100,000 in investments, you can reasonably get $4,000 in annual income,” says Betts.

Should you hire a financial adviser? 

If that sounds like a lot to deal with on your own, pros say you may want to consider a financial adviser – especially as your asset allocation may be a bit off target (though this, of course, is also something you can fix on your own). Zachary Morris, certified financial planner at Paces Ferry Wealth, notes that some of the investment selections you have made may contain overlapping asset classes, which may result in unintended consequences. “Your investment funds and smart retirement funds may also contain mid-cap value exposure, which may not have been your intention. My suggestion is to engage a financial adviser to help create a portfolio that provides exposure to all the major asset classes that takes an appropriate amount of risk to help you hit your retirement goals,” says Morris. 

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Indeed, a smart retirement or target date fund is typically designed to be pre-packaged, one-size-fits-all options for folks retiring around a specific date. “They typically provide you exposure to many different asset classes, and many of the other funds you hold are just adding additional exposure to assets you already own in your target date fund,” says Leslie.

You may benefit from talking to an advice-only, fee-only financial planner. Advice-only means that you pay them for their time, and they can help create a comprehensive financial plan. Using a certified financial planner professional can help you better understand your current situation and if you are on track for a comfortable retirement, says Betts. “You may need to delay retirement, lower income needs or consider other strategies. The earlier you know your choices, the better,” says Betts.

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