Retirement planning isn’t just about reaching a certain savings milestone – it’s about ensuring you can maintain the lifestyle you want. For Peter and his wife, both 44 and child-free, that means continuing to enjoy their boat, vacations, and active lifestyle after retiring at 62. But are their current finances enough to keep it going?
Suze Orman weighed in on their situation, and she gave Peter a surprising wake-up call.
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Peter and his wife are in a solid financial position. Their total net worth is about $912,000. Let’s break down their finances.
Financial Assets:
Debts:
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Consumer Debt: $10,000
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Mortgage Debt: $250,000
Their monthly take home pay is $11,874, and their monthly expenses total $8,702, leaving them with a surplus of $2,172 to save and invest.
By many standards, this might seem like a strong position. In fact, Peter gave himself a “B” when asked how he’d grade their financial readiness for retirement. However, Orman had a much harsher evaluation.
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Orman shocked Peter by giving him a failing grade. Why? The main issue is that Peter and his wife want to continue with their current lifestyle throughout their retirement – but Orman said they’re projected savings aren’t enough to generate the income they’ll need to support it.
Their monthly expenses sit at about $10,000. Orman outlines that even with their mortgage paid off by the time they retire, Peter and his wife will have other expenses that come up, like health insurance and long-term care. She anticipates this will keep their expenses around $10,000 if they want to maintain their current lifestyle.
Based on conservative investment growth estimates, their after-tax retirement income at 62 would be around $7,320 per month—falling short by approximately $2,700 per month.