What is retirement smart

retirement smart

Retirement Smart is a simplified, but very specific retirement calculator. It tells you when your investments are likely to last in today’s volatile world. A key concept of Retirement Smart is spending your wealth in stages – which helps to protect against market volatility. You start by setting target dates for the three main stages in life – early, middle & later retirement.

Once these targets have been established, you can easily see how much money will be needed each year to meet all your needs and stop working permanently on or before that date. You can then use a retirement calculator to estimate your investment requirements.

How much income do you require in the early years?

A clock on the side of a brick wall

The balancing act of saving for retirement means that it is important to have enough to live on during the first few years so as not to run out of money before reaching your target date. For this reason, Retirement Smart estimates the difference between what you need and what you have at each stage so that you never end up living off capital until it runs out completely because only then will your lifestyle become sustainable.

You’re going to need a lot more later!

A man sitting in front of a blackboard

In general, as we near our final targets, the amount required increases dramatically. In other words, if you haven’t saved enough during those early years, you’re going to need a lot more later! This is the reason that most people are unable to retire when they intend. Retirement Smart helps avoid this problem by making sure that you save enough early on so that you don’t have to make up for the lost time in your final years of work.

Stages of Retirement Smart

Retirement Smart has three main stages – Early Retirement, Middle Income and Later Retirement… which are fairly self-explanatory. The graphs below illustrate the difference between what we want and what we actually have in order to achieve these targets…

Early Retirement: Starting early with a very low income and building wealth in time for retirement in 20+ years

Middle Income: Retiring late in life and enjoying an active lifestyle with the security of an income for 20+ years

Later Retirement: Retiring early in life with a higher income and more expensive tastes than those on Middle Income. This also includes some final savings, charity-giving and other things that are difficult to plan for…

How long will your investment income last?

Retirement Smart is the ONLY retirement calculator that estimates how long your retirement investments are likely to last. This can be a difficult calculation, but Retirement Smart takes into account all of today’s economic factors including interest rates, taxes, inflation and market volatility. It then allows you to see what effect various different strategies – such as spending less each year in later life – may have on this sustainability date.

What if I want my children to inherit some or all of my money when they reach adulthood?

Being able to leave something for our children in our will is one of the dreams many people have when saving for retirement, so it makes sense for this element to play an important role in Retirement Smart. It can also be useful to look at our current wealth and how much would be lost if all the money was used up – either through spending or inheritance. This helps us to leave them with a legacy that will still provide for their future needs without impacting on the lifestyle of those who survive us.

Subscribe to our monthly Newsletter
Subscribe to our monthly Newsletter