How Much Do You Need to Save to Retire Comfortably
March 18, 2019
Figuring out how much you need to save for a comfortable retirement can be tough because it requires us to make complicated calculations and determine how long the money should last. However, there are other factors involved as well. If it seems like a challenging task, let us help you figure it out.
Looking at the Numbers
The average person in the US retires at the age of 63, and the life expectancy is around 85 years. That means that you need to plan that your retirement will last at least 22 years.
Then you should take into account that most advice that you can find online or elsewhere about retirement is that you will need around a million dollars.
However, a recent report shows that you can spend that one million within as little as 12 years. Plus, when you take into account that the prices keep on going up, and the worth of your money is not improving much, 12 years might even be an overestimation.
It’s not all bleak though, it still depends on which State you live in, and in some States, a million dollars is expected to last for more than 20 years, but you still have to be careful with your spending – and that doesn’t constitute a comfortable retirement.
What Should You Do?
The best thing that you can do is start making plans as soon as possible and start setting aside 10% of your income or more. Ideally, this percentage should be as much as 20%, but if you’re anywhere between the two numbers, then you’ll have a cushy retirement.
When it comes to final numbers, a good rule to follow is that you should have at least ten times the amount of your final salary in your retirement savings. To achieve this, you need to work towards having an equivalent of your salary saved by the time you’re 30; then three times your pay by the time you’re 40; six times by 50; eight times by 60; and finally ten times by the time you retire.
It All Depends on How Much You Want to Spend
A comfortable retirement is, in the end, different for everyone, and your final calculations probably depend on the amounts you make. People with lower salaries spend less and make a habit of it, and the opposite is true for those who spend more.
With that in mind, it’s good to use the rule of 4%. Whatever amount you end up saving in the end, you can safely withdraw 4% every year to live a comfortable retirement.
However, in the end, the best thing that you can do is sit down and do some straightforward calculations. Determine how much you need to maintain your current lifestyle and then multiply the number with 22.
In the end, one more bit of advice we can give you is to handle your finances well if you want to be able to save enough and retire comfortably. One way to do that is to be careful with the loans you get. The loans that won’t get you into debt and mess up your retirement plans are precisely the ones we offer so if you need a loan with good terms right now, apply on our site!