Thu Oct 17 2024, by Tyler Gardner

The Top Financial Mistake to Avoid Before Retirement

Here is one of the top financial mistakes that people make as they head into retirement. I'm Tyler, a former financial advisor and portfolio manager, and I create financial content for free to help you plan for your future.

1. Misguided Questions About Retirement Savings

Most people are asking how much money they’re going to need overall before they’re ready to retire. Is it $1 million, $3 million, or $50 million?

2. The Mistake: Asking the Wrong Question

And that’s the mistake. We’re focusing on the wrong question. It’s not about what we have as a principal investment; it’s about what you’re looking to spend each year to live comfortably in retirement. Maybe you’re comfortable spending $40,000 a year and you’d be just fine. Or perhaps you know that you're going to need closer to $400,000 a year to maintain the lifestyle you’ve come to know and love.

3. Calculating Your Target

So once you determine that annual spending number, just multiply it by 25. And boom, there’s your target FU money. Stop putting the cart before the horse and comparing your net worth to someone else's; it is always and forever relative and irrelevant.

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