Clients often misunderstand just how much capital is required to fund and sustain a retirement lifestyle. Many clients I work with are middle-market millionaires, which means they have enough money to spend a little more freely but not enough to be “all set.” One misstep along the way and they could ruin their finances and be forced to either change their lifestyle or go back into the workforce.
To help people understand the gravity of not saving enough, I educate them about how much money they will realistically need for retirement. For example, I explain to people who have been working for 30 to 40 years and averaging $70,000-$90,000 a year in income, the amount of money that needs to be saved to generate that type of income in and through retirement. Once they actually sit down and think about the amount of cash required to make that occur, it often forces them to cut expenses, postpone retirement, change careers or work part-time. They also look to increase the rate of return on their portfolios that they’re trying to use toward their retirement objective.
