On a yearly basis, what do you need to save in order to retire? The answer is different for each person. There are several factors that come into play, including how you want to live your life, the return you are getting on your investments and how long you expect to live. As a result, you should take some time to craft your personal retirement objectives. This process does not have to be complicated, although how much you put into it depends entirely on you. In addition, it is often worth it to secure the services of a financial planner.
How long will you live?
While you can’t know the answer to this question for sure, it is an important topic to think about as you save for your retirement. You must have enough money to support yourself during your golden years, however long they might last.
Make an educated guess as to how long you think you will live and then add on a few years for good measure. You don’t want to have a long and happy life, only to find that you are struggling to make ends meet in the last few years.
If you decide to retire earlier than most people, you will obviously need to save more for retirement. After all, you will be living off of your savings for a longer period of time. Consequently, if you are going to retire later than normal, you will not need to have as much money. That is because the money that you put into your investments has additional time to appreciate before you need to pull it out.
First, think about how much money you make now. Typically, you want to have about 70 percent of that number saved for your retirement. For instance, if you make $100,000 per year now, you want to ensure that you have $70,000 per year for retirement. This may seem like a lot, but don’t forget that Social Security benefits should help out some as well. If you are confused about what you need to save, go online and pull up a retirement calculator to help you.
How can Social Security help?
It is important to consider Social Security benefits as you are planning for your retirement, because they can be a huge help to you. However, Social Security cannot be the only component of your retirement plan. You also need to pull money from other sources as well. Research indicates that a little more than 40 percent of your income will be replaced by Social Security when you retire. However, keep in mind that the more money you make, the less Social Security will help you during retirement. The reverse is also true; if you do not make a lot of money, you can expect to get more from Social Security as you age. And, if you have a spouse, the amount of money you receive will depend on several factors. For example, where are you working? Where is your spouse working? How much do each of you make? All of these factors come into play in this situation. If you are confused, go to the Social Security website, and it will help you figure out how much money you may be eligible for one day.
What expenses will you have?
As you think about saving for retirement, you also need to consider what type of expenses your household will incur during that time. For example, are you on track to pay off your mortgage before you retire? If so, your expenses will go down dramatically as a result. However, do you want to travel and see the world? If so, you have to factor that in, as travel can cost quite a bit of money. Therefore, make sure you have an accurate picture of what you want retirement life to be like, so you can save accordingly.
Finally, you must think about inflation as you plan for retirement. It is not enough to simply save money; instead, you have to earn a little more than 3 percent off the money that you save in order for it to work for you in the future. In addition, think about the fact that you may need expensive medical care as you get older.
Start saving for retirement today!