Retirement Savings Calculator

How Much Do I Need to Save for Retirement?

How much retirement savings will be enough when it’s time for you to retire?  This is an age old question and should be answered with a question like “Are you flying or driving?” or “What does your situation look like now?”  The reason for this is the amount of savings you will need at retirement will be directly related to your lifestyle.  When talking about retirement living and how much savings is needed, there are many considerations that need to be evaluated before you can contemplate retirement.  This can be done with or without a financial planner.  Listed below are some key points that must be taken under consideration.

1.)    How would you like to live when retired?  This is something that most people do not think about.  Do you want to live in your current home, will you be living with children, or do you plan on living in Florida and playing golf for the rest of your days.  Have you thought about senior living centers? There are so many things to consider and this will have an impact on how you make your retirement financial plan.

2.)    How much do you make right now?  How much you make right now can determine what your retirement plan may look like.  If you make a lot of money today and live an expensive lifestyle,  in order to continue you may want to consider this.  If you make a modest living and want to live modest when retired this should be looked at as well.  If you are thinking that you could make a nice living and then when retired you will cut down and live modest you might want to rethink this.  It is important to be realistic about retirement and make the adjustments today, so you can live maintain your lifestyle later.

3.)    Will you be eligible for social security or a pension?  Social security benefits don’t amount to much, but it is a regular income supplement.  On the other hand a pension can be a good income addition and getting the information on these can help you in the decision of how much will need to be saved for your retirement.

4.)    How soon before you retire?  The longer you wait to save the harder it becomes.  If you are young, planning for retirement may seem a long way off, but this is not true.  Time really does fly and before you know it, retirement age is around the corner.  The other thing about starting a retirement fund at an early age, it will allow the money saved to grow in compund interest and investment.  Because $10 today is not worth what it was 30 years ago.  As we get older, we have less time to save which means it is most important to get with a retirement financial planner as soon as you can to discuss your needs for retirement living.

5.)    Investing: When you’re young you can take advantage of investing aggressively, this will give you higher rates of return and ensure a large retirement fund.  As you get older you can change your investment strategy.  Using this method will also put you ahead of the person keeping their savings in a bank with little or no interest.

The key to retirement savings is to find out where you are now and build on it.  If you are young, starting early is the best thing you could possibly do, if you are older and have not thought about retirement, you may want to revisit this area.  The rule of thumb is you need to have at least $500,000 at your retirement date.  This means that at the age of 21 you would need to save a minimum of $11,363 annually until you turned 65.  Keeping this in mind the older you get and don’t start saving, the larger the annual amount becomes.

A retirement calculator can help you in planning a retirement, but of course you have to actually folllow the plan for it to be effective. Try out the calculator on this site, and consider getting the advice of a retirement planner to further help you in investing for your future retirement. And do it sooner rather than later.