When you reach your mid-to-late 30s, you are hit with a panic-inducing life question—how will I ever get out of this rat race and retire? It’s a terrifying moment in a person’s life. All at once, you’re contemplating your life’s purpose, where you are, what you’ve accomplished and the goals you have yet to achieve. There is an overwhelming fear of an unknown future, where you may not have enough money to live the life you want or had planned.

Some people are desperate to retire before they turn 65 years old—the traditional retirement age—so that they have a longer length of time to enjoy their lives and the fruits of their labor. The big issue for those who want to opt-out of the race at an early age—or the ones who will keep going well into their late 60s or longer—is how much money is needed to walk away.

One million dollars used to be the general answer. You’ve probably already had this conversation with friends over drinks or at the family dinner table of how much money you would need to say, “The hell with it! I’m done and gone!” The discussion usually turns into a debate over what the right amount of money is that’s needed to tell off your boss and walk straight out the door.

In our parents’ and grandparents’ generations, things were different. They would loyally devote themselves to a company for the majority of their working lives and then retire around the age of 65. A gold watch and pension would be rewarded to them for their years of hard work and dedication. Social Security benefits would add to the money needed to retire. Since the average lifespan was much shorter then, the funds didn’t have to last too long.

Now, you’re on your own. Companies don’t offer company-funded pensions. You may get a 401(k), but that’s about it. It’s all up to you to find a way to fund your retirement. Statistics show that these days, people are living much longer. Think of how many people you know of or read about who are living well into their late 90s and even into their 100s. If you retire at 65, you may have 30 years left to live. That’s an eternity if you don’t have the financial resources to support yourself and family in the lifestyle you’ve become accustomed to.

You’d be surprised to know that there are about 12 million Americans who are worth over $1 million. That was once considered a huge sum only held by a privileged, small group of people. It’s still a substantial amount. However, $3 million is the new $1 million, according to retirement planners.

A back-of-the-envelope calculation requires you to take out about 3% or 4% of your accumulated saved money each year. On $1 million, that works out to be $30k to $40k per year. If you live in any major city, that amount doesn’t go far. You’ll also need about 75% of what you earned, while working to keep up the same standard of living in retirement.

Funding your retirement is not easy. You need to have a solid plan to put away as much money as you can. You will have to defer current gratification for the future. This entails less vacations, a smaller home, no fancy luxury automobiles and other extravagances.

Even if you save a lot of money, there will be big risks that could scuttle your plans. You have to factor in where your money is stored. If it’s in the stock market, your nest egg could crack if we have another financial crisis. If it’s in the bank, you’re only getting about 1%, so you’ll be eating into your savings faster. If there is inflation, your money will be worth less as prices increase.

You also have to seriously worry about exorbitant healthcare costs. God forbid, you get a serious illness, like cancer, and you become bankrupt or lose a big chunk of your hard-earned savings in a short period of time.

In addition to navigating and managing your career, you need to intelligently plan for your future. The younger you start, the better. You could have a fantastic career and be highly compensated, but if you’re not smart about your future, all of your hard work was for nothing.

For ages, here’s some advice you don’t want to hear: When you graduate college, live at home longer to save as much as you can early on. Move to a lower-cost place that you can rent or buy more cheaply. Save as much money as possible. Put money into your company’s 401(k) plan, especially if they offer matching. Make sure you’re aware of the debt level and earning potential of a potential spouse before you get married. Try to develop alternative financial plans that will earn you an income in old age, if everything goes wrong. Create multiple income streams that will work for you when you aren’t holding down a job that provides a steady paycheck. Recognize the cold fact that circumstances change quickly and you always need to be prepared for the worst-case scenario.

This article was written by Jack Kelly from Forbes and was legally licensed by AdvisorStream through the NewsCred publisher network.

© 2020 Forbes Media LLC. All Rights Reserved

This Forbes article was legally licensed through AdvisorStream.

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Tony Christensen and David Harris
Financial Advisors
Statera Wealth Advisors
Office : 435-673-6350