The hardest question we help clients figure out is how much they need for retirement. It is a complex question that includes many controllable and uncontrollable factors. In fact, the question can be so daunting for some that they put it off entirely.
A recent article in the Journal of Financial Planning recommends it is not wise to put it off much longer. The study referenced in the article states that people who know how much they need to save for retirement have more wealth. It also suggests that people who work with a comprehensive financial planner have more favorable retirement outcomes than other types of financial advisors or people who do it themselves.
The following is the abstract summary from the study included in the article. You can access the full paper by following this link.
Most Americans have not estimated how much they need to save for retirement. This lack of awareness may contribute to low levels of retirement savings. We investigate the relation between planning and retirement wealth. Those who have estimated how much they need to save for retirement have significantly higher retirement wealth. Respondents who rely on an advisor to help plan for retirement save more than those who do it themselves and are more likely to own tax-advantaged accounts. Advising services that did not involve estimation of retirement needs had no measurable value. Results suggest that planning, particularly with the help of a comprehensive advisor, improves retirement outcomes.