This document provides guidelines on determining how much savings are needed for retirement, emphasizing the importance of understanding expected expenses and income sources. It introduces the 'rule of 25' as a basic starting point for calculating retirement savings, while noting that personalized planning may yield a more accurate assessment. The document also warns against relying solely on past performance and encourages individuals to seek professional assistance for tailored retirement planning.

1. What's Your
Number?
How do you know when
you're ready to retire?

2. The first step
toward a successful
retirement is
defining how much
you’ll need saved.
We offer our
thoughts on getting
started.

3. Most people will spend 30, 40, or even 50 years working toward retirement,
putting a little away each month so that they can enjoy their golden years.
But when it comes to retirement savings, how much is enough?

4. On one hand, it’s really important to have
enough saved — as running out of money is
not an option.
On the other, you don’t want to save too
much, as saving too much can limit your life
during your working years.
It’s with this challenge in mind that we want
to provide some guide posts on determining
the right amount for you and your family.
It's a
balancing act.

5. Start with
Expenses
To understand how much you need
saved, we first need to understand
what retirement will look like for you.

6. Will you be ....
Staying in the same house or
downsizing?
Eliminating monthly expenses?
Adding monthly expenses?
Focusing on philanthropy?
Supporting children or grandchildren?
Changing healthcare plans?
After taking all of this into consideration,
you can map out your monthly budget in
retirement.

7. Identify Income
Sources
Next, consider what your income will look like in
retirement.
For some investors, social security may be their only
source of income. Keep in mind you can’t start taking
Social Security until age 62 and you receive your max
benefit if you wait until “full retirement age” which is
currently age 70.
Other investors will have additional sources of income
on top of social security, like rental properties,
pensions, interest, dividends from investments, or
RMDs from 401(K) and IRA accounts.

8. Find Your Net
Monthly Cash
Flow
By comparing your monthly expenses
and your monthly income, you can arrive
at a net monthly cash flow.
For the majority of retirees this will be
negative. This is normal, and why
retirement is called the “decumulation”
phase of life.

9. Will your
retirement
require
more or
less?
The larger your monthly cash
flow needs are in retirement, the
more money you will need saved
as you enter retirement.
This might sound obvious, but
many retirees don’t always
connect these dots when
planning.
If you can live on less in
retirement, you will need less
money saved.
Higher expenses, means more
money will be needed.

10. Put it all together
With all of this information compiled, we can use it to
determine how much money you’ll need saved at the start
of retirement to finance your lifestyle.
The “rule of 25” can be a good starting point. This rule
states that your nest egg should be 25 times your annual
expenses in retirement.
So if your annual expenses are $60,000, you would need
$1,500,000 at the start of retirement to feel confident.

11. We prefer to use a more sophisticated and personalized
process with clients.
We use planning technology that allow us to factor in
variables that can be difficult to track, like the rising cost
of healthcare and steadily increasing life expectancies.
This process allows us to provide a more specific and
reliable “number” to clients.
So while the rule of 25 is a good starting point, it is just
that — a starting point.
This is just a rule of
thumb

12. We’ve helped countless individual and families
navigate this process, and would be happy to help.
Need help putting
pencil to paper
and defining how
much you need
saved for
retirement?

13. Disclosures
CTS Financial Planning, Inc. (“CTS”) is an SEC registered investment adviser with its principal place of business in the State of Illinois. Registration does
not imply a certain level of skill or training. For information pertaining to the registration of CTS, please contact CTS or refer to the Investment Adviser
Public Disclosure web site (www.adviserinfo.sec.gov). For additional information about CTS, including its fees and services, please send us a written
request for our disclosure brochure. This newsletter is provided for informational purposes only. The information contained herein should not be
construed as the provision of personalized investment advice. Information contained herein is subject to change without notice and should not be
considered as a solicitation to buy or sell any security. Past performance is no guarantee of future results. Investing in the stock market involves the risk
of loss, including loss of principal invested, and may not be suitable for all investors.
An index is a portfolio of specific securities whose performance is often used as a benchmark in measuring the performance of a specific asset class.
Any references to a benchmark index are included for informational purposes only as it is not possible to directly invest in an index. The historical
performance results of each index do not reflect the deduction of transaction and custodial charges, nor the deduction of an investment management
fee, the incurrence of which would have the effect of decreasing indicated historical performance results. It should not be assumed that your
account performance or the volatility of any securities held in your account will correspond directly to any comparative benchmark index.
This letter contains certain forward-looking statements which indicate future possibilities. Actual results may differ materially from the expectations
portrayed in such forward-looking statements. As such, there is no guarantee that any views and opinions expressed in this letter will come to pass.
Additionally, this letter contains information derived from third party sources. Although we believe these sources to be reliable, we make no
representations as to the accuracy of any information prepared by any unaffiliated third party incorporated herein, and take no responsibility therefore.
For information about your particular account holdings, please review the statements you receive directly from the custodian of your accounts or
contact us. All expressions of opinion reflect the judgment of the authors as of the date of publication and are subject to change without prior notice.