Thought About How Much Money you Need By Retirement and How you’ll Get It?
Wondering how much you need by retirement? And about how your retirement is completely normal and is in fact a discussion that ought to happen.
It gives you an idea of what is in store and what steps must be taken to achieve a goal.
The average working career will last approximately 40 years.
With the advent of modern medicine and technology, most can expect to live another 25-30 years or more after retirement.
According to the Center for Disease Control, if you make it to 65, you can expect to reach 83.
If you’re married, there is a 66% chance, one of you will reach 85 and about a 40% chance you may reach 90.
With everything said, knowing how much money you need by retirement is vital to planning a peaceful retirement.
Failing to plan for your retirement is very common nowadays considering man’s need to think of only the present and nothing else.
For others, saving for retirement may feel like an insurmountable task.
It is important that you consider the following when trying to find out how much you will need by retirement.
1. Career Decisions and their Consequences
It is important that you decide on a career that not only secures your retirement plans but also gives you satisfaction.
2. Know What your Investments will Generate
If you are 100% allocated in stocks, you can expect an 8-10% return if you have a long time horizon. This is an addition to how much you will have and need by retirement.
As you get closer to retirement, you may have to reallocate your portfolio into a combination of stocks and bonds which will decrease your portfolio’s volatility, but also your total return.
3. Make Sure you Get Rid of Pending Loans ASAP!
Whether it be a loan on your car or a loan on your home, always make sure that it’s paid off by the time you are in your retirement phase so that you can know how much you need by retirement.
Investing in a house can be an excellent inflation hedge.
4. Will Retirement make you Change your Residency
If you sell your home, a certain amount of your profit (if you own one) is tax free.
Will you reinvest that money or buy another home? If your move takes you to a location, will you have a lower cost of living?
5. Figure Out How Much Income Will Come From Guaranteed Sources
It is important you to figure out how much retirement income you will have from guaranteed sources to finally know how much you need by retirement.
This includes income sources like pensions, social security, and monthly annuity payments that you may receive. The more guaranteed income you have, the less other savings you’ll need and the more sure of how much you need by retirement.
You will then compare this income to your estimated retirement expenses to calculate how much you need by retirement.
Ideally at least half of your estimated retirement expenses are covered by guaranteed income by the time you reach age 70.
If that isn’t the case, you may want to consider buying an annuity to provide additional guaranteed monthly income.
6. Long Term Care Insurance
While it’s impossible to know how much long term care insurance will cost five, 10 or twenty years from now, you make a consideration cost of long term care insurance into your retirement plans. This will account for how much you need need by retirement.
You must reach out to an insurance agent who will assure long term care insurance and you’ll able to see where the cost trends are headed. This goes a long way when you want to know how much you need by retirement
7. Health Care Costs
If you are working, ask your human resources person what the cost of health care cost would be for your situation unsubsidized and thus you will know how much you need by retirement.
Yet, you can expect to pay a certain amount per month for health care insurance or more for a single person.
8. Travelling Around
If you have any expensive hobbies or would you like to pursue a life of travel you need to be sure how much you will have need by retirement.
Fortunately air fare has remained fairly stable over the last 10 years. You need to know how much you need by retirement to make other plans related to any aspects of your life.
All too often people entering retirement do not place enough emphasis on personal planning and how much they need by retirement to ensure they maximize their opportunities.
Many lifestyle questions based on your preferences, are important factors to consider when planning your retirement since your choices will drive the financial circumstances that must be meet in order to achieve your goals.
Know the above mentioned steps and you’ll know exactly when and how much you’d need by retirement.
You can find me cooking up new ideas to keep myself occupied since I hate staying idle.
I also hope that one day I write something worth plagiarizing 🙂