Will I Have Enough Money to Live On? Here’s How to Figure Out if Your Saving is On Track

The question ‘Will I have enough money to live on?” has one short, unsatisfying answer: It depends.

But wait—before you decide no plan is a good plan, let’s consider the odds. Say Person A is single, 35 years old, has $100,000 in savings, saves $1000 from their paycheck and contributes monthly to a 401(k). They’re judicious and disciplined in their day-to-day spending but haven’t established any long-term goals. On the other hand, Person B, same age, also single with the same amount in savings and their 401(k), makes financial decisions based on how they fit within the bounds of a long-term financial plan. Person B accounts for known future expenses, desired lifestyle in five, ten years, and retirement goals. Even though Person A and Person B have an identical net worth, the odds are in Person B’s favor that they will have enough money to live on because they’ve taken the extra steps to set up a financial framework that aligns every decision they make to real financial goals.

Even though nothing in life is certain, you can improve your odds of a secure financial future by building a plan and adjusting it on a regular basis. 

If the thought of a financial plan makes you feel overwhelmed, keep this in mind—an imperfect plan is better than no plan.

So, where do you go from here?

Frame up your plan.

In a previous post, we covered the top five things you should do now to plan for retirement. 

Here’s a brief summary:

• Identify your sources of income.
• Estimate your expenses.
• List your savings plan.
• Estimate your future cash flow.
• Define your target for retirement savings.
• Know your desired lifestyle after retirement.

Without a crystal ball to see into the future, you’ll need to use what you know now to build your plan—you can always make adjustments. In fact, it’s good practice. If you’re married or making financial plans with a significant other, be sure to listen and account for each other’s individual priorities along with any goals you share as a couple.

Then, live your life.

What else does your plan need? You! It needs you to live your life and determine which parts of the plan work and which need to be adjusted. Perhaps you took a higher-paying job, something unexpected happened, or your priorities changed. Significant changes like these are reminders to revisit your plan and make any necessary adjustments to stay on track towards your long-term goals.

As a best practice, if six months pass without any major life changes, set a reminder to review your plan. (And include your significant other, too!) Having a plan isn’t enough, it needs to reflect your lifestyle and match your goals as close as possible. This means updating the plan as your circumstances and priorities change.

So, will you have enough money to live on? With a solid financial plan that allows you to make intentional financial decisions, the answer is yes.

Plan. Live. Adjust. It’s as simple (and challenging!) as that. Choosing the best options for you when it comes time to make adjustments is often the most difficult part. If you have questions about getting started, we can help.