For many years, I worked as a professional skydiver. Taking first-time jumpers tandem, coaching newer skydivers, and jumping into sporting events was not only my job, but also my passion. The feeling of freedom and exhilaration one feels when stepping from an airplane into thin air must be experienced before it can be understood. I assure you, there is a reason the birds sing.
Before every jump, I knew my number. My number was my pull altitude, the altitude above the ground at which I would open my parachute. The entire skydive revolved around this number. Any free flying, formations, relative work, or games must be finished before I hit pull altitude. If they continued beyond this number, the chances of an unsuccessful skydive would increase exponentially. My number was a key component of every single skydive.
Your retirement plan also has a key number that determines success or failure. How much money do you need to have saved before you hit your retirement date? This number will support your desired lifestyle throughout your retirement years. Do you know what your number is? If you don’t, retirement success becomes a risky proposition, and just as with jumping out of airplanes, you want to reduce risk in retirement and leave as little as possible to chance.
Calculating your retirement number is not difficult, although it may need to be adjusted as your lifestyle and goals change. To calculate your number:
- Write down how much you would like to spend per month during retirement.
- Multiply that number by twelve. This gives you your projected annual spending.
- Multiply that number by one point five. This will help cover taxes and unexpected expenses.
- Subtract what you expect to receive each year in Social Security and/or pension income. (Visit SSA.gov to obtain your Social Security estimate.)
- Multiply that number by twenty-five. This is your retirement savings number.
Knowing your number is only the first step of every skydive. Next comes planning your exit, the style of jump, the maneuvers you wish to perform, and any tricks you plan to use on landing. As fun as planning each jump is, it pales in comparison to the joy of living the experience.
Knowing your number is only the first step in retirement planning. Next comes planning how much to invest annually to hit your goal, what type of accounts to use, proper asset and debt management, and annual check-ins to reaffirm and stress-test the plan.
We work hard to help you develop a retirement plan around your number so that you can enjoy a safe and secure retirement experience, one that gives you the same sense of flying free while ensuring you land softly on the ground.
For a deep dive into your retirement number, listen to the Power Up Wealth podcast.
