Planning for your retirement is no joke. You never know what the future might hold, but you don’t want to under-prepare, get to 65, and not have enough money to sustain you through retirement. A general rule of thumb is that you’ll need 80% to 90% of your current annual income during each year of your retirement. But it’s important to take a closer look at some of the key factors that determine how much money you need to save for retirement.
1. Retirement Age
Most people assume that retiring at age 65 is good for them, but you may have hopes of retiring earlier. If you have relatives that have continued some form of work up to 70 and beyond, you may also be planning for a later retirement. However, if the latter is your plan, remember that you can never be sure how the future will impact your health. Because of that, it’s better to prepare for an earlier retirement age if you can. That doesn’t mean when you get to be 65 you can’t continue to keep working. It just means you’ll be better prepared and have more money to fall back on if things don’t go quite as planned.
2. Retirement Lifestyle
Next, you’ll need to think about how you hope to spend your retirement. Depending on the lifestyle you want, your expenses could be about the same as they are now, they could be lower, or they could even be higher.
Maybe you’re an easy-going person and you hope to use your retirement to spend lots of time with loved ones and invest in your hobbies, or maybe you hope to be a part-time retiree. You might even be someone who hopes to sell your home and hit the road full-time with an RV. In that case, you can probably make a more conservative estimate on how much money you need to save for retirement.
On the opposite end of the spectrum, you might be one of the many people who hopes to travel abroad during retirement and visit as many countries as you can. This would mean you need more money for retirement.
3. Life Expectancy
Putting a number on how long you’ll live can sound strange and nearly impossible given all the unknowns. But it’s important to estimate since it will determine how many years you should be saving for. For example, if you’re in exceptional health and have many family members that have lived into their 90s or even to over 100, you should be saving and investing your money accordingly.
Prepare Early and Get Educated
While there are some other factors to think of besides these, these are some of the biggest to consider. When planning for your retirement, you’ll want to get as much expert advice as you can. No matter what, the sooner you start planning, saving, and investing, the better off you’ll be when you finally retire someday.
At Silver Pathway, our goal is to provide retirement education for people at a variety of life stages. We offer expert, easy-to-follow advice to set you up for the retirement you deserve!
We also offer opportunities to allow you to earn extra income during retirement, if you enjoy surfing the internet, learn how to earn extra cash while you surf, click here for free eBook with all the details.