What should I know about planning and budgeting for retirement? The answer is that there are many things you should know. You will need to have a good idea about your lifestyle and how much you will need to retire on. You will also have to figure out your lifetime income, and how much you can save for the future. When you reach retirement age, the last thing that you want to be doing is struggling to survive. You want to enjoy your golden years fully!
How much do I need to retire on? First, determine your annual income after taxes. Most people will have some level of Social Security benefits, but if you have not gotten any yet, you may need to supplement this income with other sources such as overtime pay, commissions on sales or rental units, and more. All of these sources of income are called non-traditional means of generating retirement savings.
Once you know your annual income, figure out how much you need to live on after retirement. This number is called the Investment Thumb. The thumb refers to the amount of money you will need to rely on investments in order to provide you with a comfortable lifestyle when you retire. The Investment Thumb of course varies with your income so keep this in mind when figuring out your retirement age. Some people tend to put more emphasis on the thumb than others.
The next thing that you need to figure out is your retirement income vs. your spending. After you have figured out your total retirement income, it’s time to get started building your retirement savings. If you are like most people, you will probably still be working. If this is the case, then you are going to need to set aside some money each month to supplement your retirement income. It might be a good idea to consider taking out a 401k or other sort of traditional savings plan.
Now that you know how much do I need to retire based on your annual income, it’s time to start increasing your saving. How much should you save? The thumb rule is that the more you invest, the faster you will reach your retirement age. Here’s why…
By increasing your income by building a 401k and using it for living expenses, you will be assured of a comfortable lifestyle after retirement. The higher paying jobs, the more you will need to rely on your retirement income. This way, you won’t have to prematurely retire just because you found a job that didn’t allow for a full retirement package.
Of course, if you really want to increase your income and not rely on Social Security to provide for you after retirement, then you need to change your lifestyle. How much do I need to retire is a very good question to ask yourself before you begin the process. If you are like most Americans today, it is probably too early to retire. You see, many Americans are living paycheck to paycheck, they have never built an nest egg and now they are looking for a job to supplement their income. Many American families are in the same boat financially as they are having trouble retiring.
So how much do I need to retire depends on your lifestyle, if you continue to live paycheck to paycheck then you will never reach your retirement goal. It’s better to start saving now and change your lifestyle so that you can enjoy the comfort of a comfortable retirement. Remember, your lifestyle is what you make it and how much do I need to retire is a question that only you can answer. Good luck!