Eliminating a Retirement Shortfall

Question:

I ran a plan which advised me that assets were not sufficient and that clients needed $19,500 more in savings each year until retirement.

I input $20,000 more into savings and revised plan came back with:

• Current annual savings: $20,000
• Total required savings: $32,500
• Additional required savings: $12,500

 Can you explain this please and how to get rid of shortfall.

Answer:

On the Forecast page on the Savings tab, you have set maximum savings at 50% of earnings.

That's why the program comes up with $32,500 total annual savings.

Nevertheless, your client, who is 1.5 years away from retirement, and with his spouse already retired, need to fund nearly a $1 million gap.

So no reasonable contributions can help, other disposing of existing assets, for example selling the personal residence at a later point in time.

Note that you have based the projections on their current asset mix on all cash investments for the registered funds and locked-in assets.

Investing in a more diversified mix will generate higher returns for the projections, but they will still significantly fall short.

Maybe you can look at adjusting the income goals and retirement dates, in addition to using a better asset mix or finding other funds for retirement.

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Written by RetireWare / Equisoft