Have you started planning for your retirement? An even bigger question is, “Do you know how much money you’ll need for retirement?” Most people don’t have real grasp on the answer. So, how can you plan to save for retirement if you’re not clear about the amount you’ll really need?
Join SAFE Cents host Mark, as he shows you a new yet incredibly logical approach to establishing that total retirement goal amount you’ll need.
- Retirement Planning: a Video Summary
Ever wondered what you’ll do when you retire?
Will you find a new hobby? Travel the world? Do...literally whatever you want? That’s the beauty of retirement: you can do anything you want— as long as you prepare. Financially, I mean.
I’m talking about retirement planning. And you need to do that now.
Because the longer you put it off, the more likely your retirement plan will include who’s gonna wear the mask and who’ll the drive the getaway car.
So, let’s take the first step together: identifying how much money you need to retire.
Some financial planners recommend using your annual salary as a starting point. Here’s the problem with that approach: do you over-spend using credit cards? Then you’ll need more.
Are you more of a saver? You may need less. How much you plan to spend in retirement is a much better indicator of how much you need than salary. How much is that? Let’s simplify things by thinking about it monthly.
So, imagine yourself at retirement age. You look great, by the way. You’re ready to transition into take it easy and start spending all that hard-earned cash.
How much money will you spend each month on housing, food, entertainment, travel?
Try to predict your healthcare costs. Spoiler alert: those will probably be higher than they are now.
You’ll also need to consider inflation. Things will cost more in the future, so plan for that.
Once you have that monthly spending number — subtract any monthly income you plan to have in retirement, like Social Security, pensions or annuities — then it’s just a matter of simple math. Multiply your monthly spending by 12 to get your annual spending. Then multiply that number by the number of years you expect to be retired (we used 30), and you’ve got a fairly reliable retirement savings goal amount.
We’ll talk about how you reach that number in a later episode. But if you want to get cracking on that sooner, just visit our Learning Center.