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Is $1 Million Enough to Retire in Florida?

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financial retirement

By Michael Berkhahn, CFP®

According to GoBankingRates, Tampa residents who saved $1 million for their retirement will run out of money in 18 years, four months, and 7 days on average. Couple that with a recent Charles Schwab Survey which revealed that the average worker believes they need $1.8 million to retire, and we begin to see a stark contrast when comparing that number to the latest Federal Reserve’s Survey of Consumer Finances, which reports a median retirement account balance of just $185,000 for Americans aged 55-64.

Inflation has always been a threat to one’s retirement savings, but the effects of higher inflation over the past few years have left countless Americans even further behind in reaching their retirement goals. Although inflation rates have eased since their peak in 2022, there are still many lingering financial obstacles for retirees to navigate. Despite these challenges, there are steps you can take to boost your retirement savings. Here are five easy ways to ensure that $1 million is indeed enough to retire in Florida.

Related: 5 Easy Ways to Gain Your Financial Independence

  1. Evaluate Your Budget: In the face of rising living costs exacerbated by inflation, individuals must reassess their monthly budgets. A deep dive of spending habits may reveal opportunities to cut back. For example, a survey by C+R Research, reports that 42% of consumers pay for forgotten or unused monthly subscriptions. Simply by eliminating unnecessary expenses can help redirect funds toward your retirement savings.
  2. Pay Down High-Interest Debt: With the numerous rate hikes by the Federal Reserve, interest rates on debts have surged. Individuals burdened with variable or high-interest debt should develop a strategic repayment plan. Eliminating high-interest debts not only reduces financial strain but also frees up more money for retirement savings.
  3. Contribute More to Tax-Advantaged Retirement Plans: For individuals aged 50 and older, catch-up contributions to retirement accounts can “significantly” enhance savings. In 2024, catch-up contributions for 401(k), 403(b), and most 457 plans amount to $7,500, while the limit for additional contributions to IRAs remains at $1,000.
  4. Re-Evaluate Insurance Policies: Florida residents have seen significant increases in their insurance costs over the past few years. According to the Insurance Information Institute, homeowner’s insurance has increased 102% in the last three years in Florida and the cost of full coverage car insurance in Florida is 55% higher than the national average.
  5. Consider Working Longer: While the idea of working beyond the initially planned retirement age may not be ideal, it is a practical consideration for securing one’s financial future. Delaying retirement results in increased social security benefits, additional contributions to retirement accounts, and one less year of drawing from retirement funds.

The next important step is determining how you actually withdraw your retirement savings once retired, which is often dependent on current market performance. Being strategic with your withdrawal methods is key to extending your retirement funds and maintaining your quality of life.

While pursuing a financially secure retirement, there is no one-size-fits-all solution. However, by combining the aforementioned tips with a comprehensive financial plan, individuals can significantly improve their chances of enjoying a stress-free retirement. The key lies in proactive financial management, continuous reassessment, and strategic decision-making to navigate the ever-changing economic landscape.

Michael Berkhahn, CFP®, is Vice President of Graham Capital Wealth Management, an independent Registered Investment Advisor that specializes in providing investment management strategies for high net-worth families, foundations and pension plans. As a CERTIFIED FINANCIAL PLANNER™ practitioner, Berkhahn is part of an elite group of advisors who have completed the necessary training and requirements to hold the CFP® designation and is a fiduciary committed to complying with its continuing education and ethics standards.