$1 Million? $2 Million?

What’s your ‘magic number’ for a comfortable retirement life?

By Deborah Jeanne Sergeant

Remember when $1 million represented the “magic number” for a dream retirement? Those days are long gone.

The Bureau of Labor and Statistics estimates that people aged 55 to 64 need more than $56,000 per year minimum for household expenses, including health care.

For someone who will live 25 more years (80 to 89), that’s $1.4 million. If one lives frugally in retirement, less would work, right?

“No,” says Randy Zeigler, certified financial adviser with Ameriprise Financial in Oswego.

“One million dollars doesn’t go as far as it used to,” he said. “It seems like a lot more than it really is. Inflation is critical.”

Zeigler has been a financial adviser for 32 years. He has some clients who have been retired 30 years and have been retired as long as they’ve been worked.

“How well they manage money is really critical,” Zeigler said.

He added that generally speaking, many people need between 65 to 75 percent of their pre-retirement income in the year that they retire; however, that income needs to be adjusted for inflation. If they’ve been contributing to a 401k or IRA plan while working, the difference once they retire may help make up for inflation.

“I do a cash flow worksheet to figure out what their needs are and compare it with their pensions, Social Security and investment savings to determine what kind of position they’re in.”

Lee M. Gatta, a chartered life underwriter, chartered financial consultant, accredited estate planner in DeWitt, said that many people forget to think about increases of health care insurance, replacing vehicles, emergency funds and taxes — and those are some of the biggest mistakes made in financial planning.

Some people don’t understand how Social Security works when one spouse dies. The income from spouse with the bigger check continues to arrive; the other payment discontinues.

Many people often don’t realize that early in retirement “many spend a lot of money,” Gatta said.

Whether it’s to fund new hobbies, take a few trips or a general shopping spree, many retirees spend a goodly amount right away, according to Gatta. He recommends clients save enough to replace 70 to 80 percent of their working income.

Chris Gardner, president of FMF&E Wealth Management in Syracuse, encourages clients to begin by determining their goals for retirement, looking at their budget and then trying to quantify expected expenses during retirement. For example, if a client should have his house paid off by retirement, then the monthly mortgage payment would no longer remain in his budget.

“There’s no rule of thumb or back-of-the-envelope answer because everyone’s so different,” Gardner said. “It depends upon what someone’s lifelong goals and dreams are. That includes how much they’re going to spend and what lifestyle they want and what family members and institutions they want to support and the legacy they want to leave behind.”

Longevity also makes a difference. Instead of saving for enough until age 80, people should really consider more, especially if longevity runs in the family.

“I don’t work with a lot of folks who want to distribute their assets and go into a government home,” Gardner said.

Gardner said that statistics from the Society of Actuaries estimate that for a couple aged 65 exists a 43 percent chance one of them will make it to age 95 and many of those will need long-term care for more than 90 days.

“Making the right decisions when you are a few years out from retirement and being careful about distribution planning is extremely important and takes skill,” said Sonnet Loftus, certified financial planner with Michael, Roberts Associates, Inc. in Syracuse. “It is better to prepare than repair. Having a plan makes a difference when trying to ensure that you have adequate savings for retirement.”

Financial planners can help formulate a workable plan and offer advice that’s tailored to the individual’s life and goals.