Didn’t You Calculate How Much Money You Need In Your Retirement?

Retirement planning is a crucial process to have a secure and stress-free life after

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Want to have a jobless life? Or retire early? But without money, it’s difficult to even think about that. What if you don’t know how much you need for your retirement? Don’t panic, most people are unaware of the answer to this question.

Studies conducted show an astonishing picture of every age group in America. One of them includes Northwestern Mutual’s 2019 Planning & Progress Study. Which highlights that 56% of Americans don’t know how much they’ll need to retire comfortably.

The surprising thing is the answer to the question “What steps, have you taken to address the possibility that you may outlive your savings?” was mostly (41%) “I haven’t taken any steps”.

15% of Americans have no retirement savings at all, and more than 1 in 5 (22%) Americans have less than $5,000 saved for retirement. On average, people feel there’s a 45% chance they will outlive their savings, yet many have not tried to address this.

A large portion of Americans (58%) are more concerned about retirement today than they were in September last year, according to the Sep 2020 Retirement Confidence Index from SimplyWise

What Is My Retirement Goal?

I tried googling it for the first time when someone asked me this question.

There are a lot of guides available on the internet for your comfortable journey ahead. But I think it varies from person to person.

First, you need to know at what age are you planning to retire and how you plan to live? Also, have a life expectancy number so you don’t run out of your savings at the time when you need it the most.

There are different ways to get your retirement goal number:

· 4% Rule: I guess! You might be knowing the 4% rule. As per this rule, you withdraw 4% annually from your sum total investment.

· 15% Rule: To Save 15% of your income per year starting at 25 would suffice for your retirement goals.

· Multiply By 25: Multiply your current annual spending by 25.

· 80% Rule: Many financial advisors believe that you need 70% to 80% of your average income during your working years annually to fund your retirement period.

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Don’t worry! Retirement Goals are a relative thing and it mostly depends upon your expenditure.

There’s not a cookie-cutter formula for every person’s retirement. Several factors affect your retirement goal:

  • Planned retirement age: This factor greatly influences your investment amount. The earlier you start, the lesser burden it is.
  • Life expectancy: It’s better to have a greater life expectancy, so to be on a safer side.
  • Annual Contribution: The amount you contribute is one of the major factors that affects your goal
  • Annual Retirement Expenses: Expenses like health care, insurance, utilities, state taxes, telephone services.
  • Portfolio performance: Future is unpredictable and several other factors can shake your assets.

The amount you save for retirement relies closely on your earnings and the way of life you need while you retire.

You must ask these basic questions while giving a retirement goal number.

  • How much have you saved so far (starting balance)?
  • How much worth are your assets and liabilities accounting at present?

By knowing answers to these questions one can be in a better position to provide you with a clearer picture.

Financial calculator can be helpful

Today they're a lot of online calculators available that might help you find the ballpark number for your retirement goal. Some of them use a pretty simplistic approach like current age, age of retirement, retirement money goal, saved money till now, and your monthly contributions. While, some of them use a more sophisticated approach (e.g. Plootus) to find the retirement goals by analysing your expenditure behaviour, your net assets and liabilities, your growth strategy to give more personalised advice based on your needs, also taking into account the inflation and taxes over the period, focusing on what options you need to invest as per your retirement goals.

These calculators can show your expected track whether or not your assets will last till age expectancy.

The above-mentioned factors are important as different needs and plans require different treatment.

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Predicting Your Retirement Needs

First-thing-First you need to keep track of all your expenditure.

Try to segment and calculate your expenses:

  • Groceries, Utilities, Dining, Telephone and Online services, Insurance, Commute, Entertainment services

Track these expenses monthly or quarterly to have a much better picture of what goes out and what comes in.

Do You Have Any Retirement Goal In Particular?

You might want to travel the world, purchase a house, or buy an expensive car. Add those amounts to your current spending. Also, add money for uncommon expenses, and miscellaneous expenses.

After getting approximation for monthly expenses, you can have an idea about how much you need on monthly basis in the retirement period.

Our Way to Assist You for Retirement

Try to ask anyone about retirement plans, 401(k) is the most common and popular name on everyone’s lips, as the vast majority of the workplaces offer a match of the sum an individual contributes also known as employer-sponsored 401k plan.

Coming to 401(k) accounts, a lot of individuals think it as a “set it and neglect it” way to deal with saving and contributing, as per the Schwab study. 33% of the participants who were auto-enrolled have never increased their contribution rate (in 401k plan), and 44% have never changed their investment selections.

Give these plans the attention they need and in return, they’ll reward you in a better way. Supervise and focus on your 401(k) for its development. This attention also applies to other brokerage accounts, IRAs, and investment accounts. To fulfil this job, you are likely to get benefit from a professional. Give these plans the attention they need and in return, they’ll reward you in a better way.

Financial advisors’ recommend increasing your contributions as your earnings increase and checking in on your accounts more than once a year to make sure they’re on track.

If you’re young, in your early 20s then you’re in the best position you can be in. If you start saving money now for your retirement, chances for your bright future definitely increase. Although age is just a number, you can start saving for retirement at any age as the saying goes “Better Late Than Never

Bonus: Your Free Financial Advisor

To create a diversified portfolio, some people hire a financial advisor or advisory services who may charge 0.25% to 2% of total assets, as fees. Plootus does it for Free. You may ask why? They are on a mission to democratize financial planning. Get Free Retirement Calculator Here!.

Plootus (available on Apple and Android) will not only choose the best performers to suit your retirement needs but will also help you decide how much to invest in the various options available to you based on your different expenses and net-worth.

Plootus: 10 minutes could add 50 thousand dollars or more to your retirement account!

We Make Your Financial Planning (401k) Simplified and Assist You To Plan For Retirement