How much money do I need to retire
Get to know how much money you need to have to retire
Retirement is one of the most crucial decisions in one’s career life and has to be taken sensibly and logically.
Never let you this decision be influenced by any kind of emotions or circumstances, as this can become your turning point in your life as well.
The best way would be to follow these steps which have been discussed in this edition to have a happy secured retired life. The amount that is required for you to make this crucial decision is based upon few determining factors like the ones discussed below.
To start with, you need to first have an idea on your every month expenses and the amount. Retirement plans are very much subjective matter and hence needs to be individually analyzed to calculate the needs. All you need to do is to take out a calculator and make a proper estimate of your every month needs and requirements. Don’t miss on any kind of expenses in the same. Keep note to divide the yearly expenses by 12.
While calculating the expenses never forget to leave out the other entertainment expenses like the movies, restaurants, vacations, emergency expenses, etc. To make things easier and understandable, let’s take the monthly expense to be about 5000 dollars.
Next you would need to add up the residual income. Residual income is basically the income which you get to receive even if you are not working any longer. This could be the rent you receive from your flat given on lease or any other assets from which you get to receive some kind of financial earnings.
Though one chief source of residual income is social security, but it is always advisable that one does not consider them as one. Take for example your residual income is 1000 dollars.
Now you would need to subtract the monthly residual income from the monthly expenditure. Thus from the supposed values taken, the value obtained is 5000-1000 =4000. Now you would need to multiply this value with twelve to get the value as 4000 x12 = 36000 dollars. Next add around thirty – thirty five percent on the value obtained in step three. This added 30% would help you to get the inflation increases in the years to come.
The fifth step would be to make safe retirement plans which can be obtained by dividing the value obtained in the fourth step by the value 0.06. This six percent consists of annual return with no reduction in the nest-egg principle. It is always better if you get to have better figures than this. If you are a conservative thinker, you can add another fifteen percent to be one the safer side.
Apart from this, saving on unnecessary expenses is always crucial; this is because we all know the well-known saying of something saved is equivalent to something earned. Planning properly for a happy retire is really challenging and a proper estimate has to be made else things would go topsy- turvy in your financial and family life ahead.