Think you need a ‘magic number’ to retire? Here’s what you should focus on instead (2024)

The last few years of economic uncertainty and inflation are continuing to weigh on investors as they plan for retirement, with most investors’ ‘magic number,’ or the specific savings target they think they need to live in retirement, now between $1 million and $2 million, according to a new survey by Nationwide. But how realistic is that goal, and should you even be aiming for it?

“While it’s good to have a goal in mind, it’s more important to focus on a holistic approach to income planning instead of trying to hit a single number,” said Rona Guymon, senior vice president of Nationwide Annuity Distribution. “In fact, according to Nationwide’s survey, only 38% of investors believe in having a magic number target in place. Since everyone’s magic number is different, rather than trying to match someone else’s target, your best bet is to work with an advisor to plan for retirement goals that fit your needs.”

Today’s turbulent economy is impacting more than just how much investors feel they need to save. According to Nationwide’s survey, nearly half (49%) of investors have delayed, altered or cancelled their dreams for retirement due to economic conditions seen in the last five years, and one-third (33%) are worried about paying monthly bills in retirement.

Focusing on what you can control and partnering with an advisor to establish or revisit your long-term plan are two of the most immediate steps investors can take to feel more confident about reaching retirement, Guymon said.

“Working with an advisor to plan for your own unique circ*mstances – like where you live, your lifestyle preferences and your healthcare expectations – is going to be key in planning for and meeting expenses you might have in retirement,” Guymon said. “Advisors can help review financial and investment strategies, as well as diversify your investment portfolio to help plan for steady income in retirement and guard against market volatility.”

With the rising cost of living causing investors to rethink or redefine their retirement planning strategies, advisors are seeing their clients use more non-traditional approaches to meet financial commitments that may lead to adverse outcomes, Guymon said. More than a third (34%) of advisors said their clients are drawing more funds from their retirement accounts, and an additional 23% said their clients are liquidating assets.

However, advisors have solutions that can help. According to Nationwide’s survey, annuities, diversification, non-correlated assets and liquid alternatives, such as mutual bonds or exchange-traded funds, are all strategies advisors recommend to help protect your assets against market risk.

While there is often a cost associated with working with a financial professional or advisor, Guymon stressed that the cost of not planning holistically for retirement can be much more damaging to your long-term financial future.

Need to connect with a financial professional? Nationwide has a team of specialists ready to listen and learn about your unique insurance and financial needs.

Investing involves market risk, including possible loss of principal. No investment strategy or program can guarantee a profit or avoid loss.

NFM-23883AO
05/2024