Finance for Freelancers: Do I Have Enough Saved for Retirement?


Conventional wisdom says you should have at least 10 times your annual income saved at retirement.  Most experts suggest you should plan on retiring at age 70, and delay taking Social Security until then. But you should spend some time to develop a more accurate, personalized projection that takes into account your expenses, savings and ability to generate income. Four basic questions to consider:

How much will I spend each year? Start by considering how much you spend now, and think about what you want in retirement. Will you want to travel, or live a more local life? Will you have family members who might need your help?

How much in savings will I have if I continue the track I’m on now? You can use an online calculator like this one to project where you’ll be at your current levels of saving, and your anticipated date of retirement.

Will my savings be equal to the amount I want to spend over the last 20 or 30 years of my life? Once you have calculated your annual spending, multiply that by the number of years you expect to be retired — say 25, if you expect to live to 95. Then multiply that total by 1.04, 25 times. That multiplier, 1.04, assumes a 4% inflation rate.

What assets could I tap? For most Americans, their home is their biggest asset. If you are willing to sell it or draw equity from it, you can take this into consideration in your retirement plans.

Then, you can calculate how much income you’ll be able to generate past the age when you intend to start drawing on your retirement accounts. But treat this income as gravy; remember that a large number of people have to stop working sooner than they planned because of health issues.

Here are Charley Ellis’ suggested retirement porfolios by age:

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