Saving For Your Retirement
So exactly how much do you need to save for your retirement? And if you just happen to be around your early 20s, why should you?
Statistically, only one out of 10 Americans is prepared to retire. If you are in your early age, saving for retirement is relatively simple. It seems almost exhausting repeating it, but compound interest works best for those who are starting young, allowing the cash at hand to compound and increasing your savings drastically nearing the end of your retirement fund.
Which Retirement Saving Calculator Do I Need?
There are outstanding retirement saving calculators out there, a search online would reveal plenty of financial institution offering these service free of charge. For those who do not know which one to start with, may I suggest Charles Schwab Retirement Calculator?
You are able to adjust the factors like savings, amount spent and intended retirement age, which is what I like about this calculator.
Which Numbers to Plug Into The Saving Calculator?
How much then do you need to save for your retirement? If you do not have a target, how are you going to achieve it? You need some figure to work with.
Taking the annual figure of $75,000 from an article on happiness and financial position, where assuming you will be spending this much to attain a standard of living that is relatively high.
All these would, however, vary accordingly to your life plan. If you are planning to live your retirement age consuming luxury goods like changing cars to the latest model or playing golf, basically engaging in expensive hobbies, then you would probably need more than the average sum of seventy five thousand. And the converse is true: were you to remain frugal by spending less than the usual citizens around you, then you would probably need less than the sum required.
I Want To Do the Sum Myself
For those who would rather determine for themselves the sum needed for their retirement in old age, you can learn to determine your final saving. If you have learned about exponentials, then it should be relatively easy. Having with you the formula would ensure that you can get the answers independently, without referring online.
But with all retirement saving calculators or manual calculation, they are merely a gauge of how much you must save. The annual compound interest is assumed to be constant, which is never so.
Calculating how much do you need for retirement is merely the first step. You only get a perspective on the approximate sum to save. Meanwhile, you should be making the necessary adjustments to cut down and budget on your daily expenses so to better able to reach the necessary amount to save and contribute to your retirement funds. Consult your financial advisor (you do have one, don’t you?) and have him/her discuss your retirement plan.