How much retirement savings should I have now?
The amount you need to save for retirement is one of the most challenging questions, because the answer is always: “depending on the situation!” A response “as appropriate” could be frustrating for some, as they look for a magic number to help them decide if they are on the right track. At first, there was already a lot of uncertainty about the entire retirement plan process.
In general, people live longer, the costs of health care are rising, pensions are disappearing, and what social security will look like in a few decades is shrouded in suspicion. But individual retirement plans must be private. Due to serious health problems, deciding how long you plan to live, or if you plan to draw a shorter life expectancy, can drastically change your future retirement needs. Whether or not there is a mortgage or consumer debt, entering retirement age will affect your retirement income needs.
The main point of view is that lifestyle choices largely determine how to make the most accurate estimates of our income needs and future needs.
Given all the unique variables and uncertainties about how many people need to save to obtain a high probability of success, it makes sense to have some general guidelines to help us track our progress.
Retirement Savings to Income Ratio A golden retirement rule is based on the savings factors associated with your income. In this way, savings goals are created on the basis of a multiple of income to help people track their progress throughout the accumulated phase of their working lives.
Fidelity has established a benchmark for retirement savings for people of different age groups. For example, in order to live the same comfortable life after retirement, Fidelity suggests that at the age of 67, people can save up to 10 times their annual income.
They also provide a calendar that provides some useful benchmarks to achieve the recommended savings after retirement:
Before age 30: Save 1 time the equivalent of your salary
At the age of 35: Save your salary twice
At the age of 40: Save your salary for 3 times
At the age of 45: Save 4 times your salary
At the age of 50: Save 6 times your salary
At the age of 55: Save your salary 7 times per
At the age of 60: Save your salary 8 times per
At the age of 67: Save 10 times your salary Keep in mind that the savings factor used by fidelity is adjustable, depending on the time you want to retire and the lifestyle you expect to be in retirement. For example, a person who plans to retire at the age of 67, the average lifestyle of 45 years of age will have 4 times the target salary savings prepared for retirement. However, in similar cases, adjusting the retirement age to 65 years raises the savings factor to 6 times the salary.
You can see your retirement savings factors based on your current age, the time you want to retire and the needs of the lifestyle consumers you want.
Important guidelines for retirement plans The conventional wisdom is that after retirement, you need to replace 70% to 90% of your current income in order to maintain your retirement lifestyle. Another common rule commonly used in setting up the retirement plan is often referred to as the “4% rule.” This is a common assumption that you can withdraw 4% of your withdrawals from your retirement savings balance each year and increase them with inflation each year.
So if you have $ 1 million in your retirement account, you can spend $ 40,000 in your first year.
This basically means that you want to spend 1000 dollars a month after retirement and you will need about 300,000 dollars in retirement savings.
Rationale for the prudent use of income-based savings guidelines It is important to recognize that these savings benchmarks are only milestones and that, to some extent, they are a moving target. A few years ago, the so-called “magic number code” was 8 times the salary at the age of 67. The best way to determine if you have saved enough money for retirement is to run a more detailed retirement calculator and make a budget plan for the retirement. retirement based on the real needs of spending on lifestyle.
This will allow you to review your general financial situation, including personalized social insurance estimates, the potential benefits of your home to use, the range of expected income based on your goals and other sources of income, such as inheritance, part-time work or rental income
