Are We There Yet?

By Dave Verbeke

Vacation season is upon us! With vaccination rates increasing, travel & social distancing restrictions have been eased. People are ready to see the world again and get out of their houses. I remember my parent’s loading up the station wagon and heading off to a new adventure with us kids in the back. Before the trip, there was a call to the Mobil Travel Guide to get the maps & routes needed to get us safely to the destination. We’d follow the highlighted route across
country until we arrived at the vacation spot.

In many of my meetings with clients, I get the same questions I used to ask from the back seat: When are we going to be there? How much longer? Does the hotel
have a swimming pool? Now the questions are: Am I saving enough? How much
longer do I have to work? Can I retire to a warmer climate (with a swimming
pool)? Just like my parents would consult the Travel Guide to make sure we
were on the right path, we are here, as advisors, to help you on your journey to
retirement.


It’s helpful to check the mile markers to see if you’re on the right track. There are
some quick financial benchmarks to see how you compare. Since the goal in
retirement planning is to replace your income once you retire, many of these ratios use your gross pay as a factor.

Category                      How to calculate                                     Goal                             
Emergency Fund               Cash/monthly fixed expenses                          3 to 6 months
Housing debt ratio            Housing costs/gross pay                                   Less than 28%
Total debt ratio                  Housing costs+other debt pmts/gross pay    Less than 36%
Retirement savings rate   Contributions+employer match/gross pay    10% to 15%