Can You Retire from the Railroad With a Million Dollars?

Welcome to another edition of the Highball Advisors Railroad Retirement Whiteboard! I’m John McNamara from Highball Advisors, and today we’re diving into a fun and important question: Can you retire comfortably with a million dollars in savings? It’s a figure that gets tossed around a lot, and while a million dollars is a significant amount of money, the answer isn’t as straightforward as it might seem. There are several factors to consider when planning for a great retirement, and today, we’ll explore what it really takes to make that million work for you.

Retirement Lifestyle

First, let’s talk about the kind of lifestyle you envision in retirement. Do you plan to travel extensively, buy a second home, or perhaps purchase an RV? Your retirement lifestyle will significantly impact how far your savings will go. Early in retirement, when you’re more active, your spending might be higher. Later, as you slow down, your expenses may decrease. It’s crucial to consider these phases and how they align with your million-dollar nest egg.

Risk Tolerance and Investment Returns

Next up is your risk tolerance and the rate of return on your investments. How are you investing your money? Are you comfortable with higher risks for potentially greater rewards, or do you prefer a more conservative approach? It’s essential to strike a balance—taking on too much risk could lead to significant losses, while being too conservative might not keep pace with inflation. Finding the right investment strategy is key to ensuring your savings grow and sustain you through retirement.

Health and Life Expectancy

Your health and life expectancy are also major factors. How long you’ll need your retirement savings to last is an unknown, but you can make educated guesses based on your health and family history. If longevity runs in your family, you might need to plan for a longer retirement, which could require a larger nest egg.

Location and Cost of Living

Where you choose to live in retirement will have a big impact on your expenses. For example, retiring in a high-cost area like Manhattan will require significantly more savings compared to a more affordable location like Greenville, South Carolina. Consider the cost of living and how it aligns with your retirement goals.

Railroad Retirement and Other Income Sources

The amount of guaranteed income you’ll receive from Railroad Retirement and any other pensions or income sources is another critical factor. If you have a substantial Railroad Retirement benefit or pension, you may not need to rely as heavily on your savings. This guaranteed income can provide a stable foundation, allowing your nest egg to last longer.

Additional Considerations

There are a few other things to keep in mind as you plan your retirement:

• Inflation: Even moderate inflation can erode the purchasing power of your savings over time. It’s essential to factor this into your retirement spending plans.
• Saving Strategies: Contributing to your 401(k) and taking advantage of company matches is a powerful way to build your retirement savings. Aim to contribute 10-15% of your income, and importantly, avoid dipping into these funds before retirement. Let your investments grow through the power of compounding.
• Staying the Course: Once you’ve set your retirement strategy, stick to it. Avoid taking loans from your 401(k) or making early withdrawals. Consistency is key to reaching your retirement goals.

Conclusion

The purpose of today’s discussion is to help you understand the many factors that go into building a successful retirement plan. Whether a million dollars is enough depends on your unique circumstances, lifestyle goals, and financial strategy.

If you’d like to delve deeper into these issues and figure out the right path for you, consider signing up for my Boarding for Railroad Retirement process. We can work together to determine a solid nest egg number tailored to your needs. Don’t forget to click the notification bell for updates, subscribe to the channel, and share this video with fellow railroaders.

Until next time, everyone, please stay safe, stay on track, and take care. So long, everybody!

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Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. Highball Advisors encourages you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Highball Advisors, and all rights are reserved from Highball Advisors, and all rights are reserved.