How do you know when you’ll be ready to retire? Watch this short video to learn how some simple math can quantify your progress and help you see the finish line.
Are you prepared for retirement? Find out by calculating your Total Term.
Your Total Term estimates the number of years you could live on your current assets if they did not grow — in other words, how far your current wealth could comfortably carry you through retirement.
The good news is that your assets are likely to grow, and so the larger your Total Term, the more likely you are to never outlive your money.
Here’s how to calculate your Total Term:
First, add up your cash, investments, real estate equity, and practice equity. These are your assets. Next, divide your total assets by how much you spend each year.
This will tell you how many years you could live on everything you currently own. For example, if your assets total $1 million and you spend $100,000 annually, then your current wealth can support you for at least ten years.
So what’s a good Total Term? Let’s take a look:
A Total Term score in the mid-teens or lower means you’re probably not ready to plan your retirement party. You haven’t accumulated enough assets to support your spending habits. But as your Tt climbs into the 20’s and 30’s, you become better positioned for a comfortable retirement.
So do you feel good about the Total Term number you’re looking at? Or does it disappoint you?
If you’d like some free, personalized retirement advice, call Dentist Advisors. We can help you find ways to increase your Total Term so you can retire sooner and better.