How much do I need to retire? If you want to live a comfortable life in your retirement years, you need to know how much you should save up for those years. It is never too early or too late to start planning and saving up for your retirement. Here’s a formula to help you determine how much you need to retire. Write down these factors on a piece of paper and get a calculator.
- The age you would like to retire
- Yearly amount you would like to retire with
- Compute the number of years you are expected to live after retirement
- From your current age, compute the number of years you have until retiring
- Multiply the years that you are expected to live after retiring, by the yearly amount you expect to have
- Divide the amount by the number of years you have from the date today until your planned retirement date. This is the amount of money that you need to save yearly.
This is assuming you are in good health, have your own home without any outstanding debt on it, and do not have other investment incomes. Most people underestimate how much they will need to retire.
The earlier you start planning your retirement, the better. Start thinking about what actions that you can take today to save up enough money to live a comfortable life when you retire.
Here’s an example for the formula stated above.
- You would like to retire at 70.
- You would like to have $50,000 every year in retirement.
- You still have about 30 years left to work and earn.
- Based on your current age, you will live for 18 or more years after you retire.
- Multiply 18 by $50,000 (the amount you’d like to earn yearly).
- You need to earn $900,000 and you have 30 years to earn this amount.
- Divide $900,000 by 30. You have to save $30,000 yearly from now until you retire.
Of course, there are a lot of things that may happen such as changes in your health. Other factors to consider include your civil status and whether you will leave a legacy for your family. You need to consider the “what ifs” that may come along the way so that you can properly prepare for such events.
You can change the numbers to fit your situation. No matter how you look at it, retirement planning and saving up for those years can still be overwhelming. It is always best to start as early as now. Generating several streams of income and investing can help you prepare for your retirement and continue to live a comfortable life even after retiring.
Do you want a wealthy, modest or comfortable lifestyle? Your answer will affect the amount that you need to save up. If you don’t plan, you won’t be able to enjoy your golden years. Start investing today and live a happy life in the future. A great company to look to with help to plan your retirement would be The Retirement Planning Company. They can help you reach the goals the want to set. Contact them today for a quote!