How Much Money Will I Need
When I Retire?
This is a question often asked by those who are planning retirement, and for good reason. One common rule of thumb is that you'll need 70% of your pre-retirement annual salary in order to live comfortably. If you've paid off most major debts such as a mortgage, and are in great health when you stop working then this might be a viable goal. If you have grand dreams of globetrotting, building a dream home, or going back to school, you might need 100% of your annual income - or perhaps more.
Take time to evaluate where you are and what kind of circumstances you may be in. if you have children in college or plan on going back yourself, these kinds of expenses can change from year to year. Have a good sense of what expenses may be coming in while you're in the transition of leaving the workforce and entering retirement. Getting rid of extra or unnecessary expenses is a good step to take before your income changes. If you're planning on selling your home and taking a trip around the world you may not have a mortgage any longer, but you will have other fees associated with traveling such as transportation and housing.
Just like while you're working and receiving a regular paycheck, living beneath your means is key to being financially responsible. Creating a regular budget and keeping it up to date will help substantially in keeping you out of the red understanding where your money is going. While there is nothing wrong with indulging every once in a while, responsible spending is necessary in order to live comfortably in retirement and ensuring you have enough money to last.
When planning your retirement it's important to make realistic estimates about what kind of expenses you will have. Your lifestyle and how you want to live in retirement needs to be evaluated and you need to be honest about how much it will cost. These estimates are important when you start to calculate how much you will need to save in order to comfortably live and afford your retirement. Taking a look at your current expenses and estimating how they will change is one way of figuring out the costs of retirement. Talking to a certified financial planner will help you figure out the best way to save for retirement. There are several strategies to keep your finances strong and long lasting once you retire.
Retirement Research Group is dedicated to helping plan sponsors and businesses connect with the right financial advisors to achieve their goals.