Being able to retire isn’t about reaching a certain age it is more about reaching a dollar figure. There are lots of people who retire from a job and then have to return to the workforce in order to make the amount of money needed to survive for the remainder of their life.
How Much Do You Need to Retire?
No one can tell you exactly how much you need to have saved before you retire but there are some simple things to consider in order to help you plan your retirement.
If you are starting late in life, your best bet will be to max out all of your retirement accounts as quickly as possible. Doing so will give you more time for you to receive compounding returns on your investments until you retire.
If you start saving for retirement while still young it is also smart to max out your retirement accounts if you can do so. If you can’t max out your retirement accounts save as much as you can. Even a relatively modest amount in your IRA today could mean a big return in twenty to thirty years from now. Check out one of the many retirement calculators for retirement planning. Using a retirement calculator you can take an estimated amount you want on the date of your retirement and determine how much you should put into your retirement account each month now to hit your goal.
Whether you are getting a late start or an early start, contribute to your retirement savings each month as much as you can. If you are able to max out your retirement accounts,great,if you can’t don’t worry about it,simply continue to contribute to your retirement accounts each month. The money that you contribute now will likely compound itself for your retirement.
How Often Should You Contribute To Your Retirement Accounts?
In my opinion it is best to contribute to your retirement accounts at least once a month. That way if you miss a month you have plenty of opportunity to make it up later in the year. Some consider it easier to commit to saving a relatively small amount each month rather than a large amount once a year. It also helps keep you from using money that is earmarked for retirement savings for something else.
If you have the option to have your retirement contributions taken directly out of your paycheck then you should do so and your frequency of retirement contributions will depend on how often you get paid. Making your retirement contributions automatic helps ensure that you will save for your retirement.
However much you need to retire, it is smart to start saving as early as possible and save as much as possible.
2 responses to “How Much Should You Save for Retirement?”
I think it really comes down evaluating your expectations of retirement. If you want to move and purchase a new vacation home that dollar figure will much different if your plan is to possibly continue working part-time and have conservative lifestyle.
If you’re late in the retirement savings game it will be at least as important to look at the other side of the retirement equation, which is spending.
By cutting now and learning to live on less you accomplish two important goals. First you free up money for savings and investment, and second you lower the amount of money you need to sustain your current lifestye.
Paying off debts would be a logical place to start since you’ll typically free up more cash flow by eliminating payments than you will earn on an equivalent amount of money invested in interest bearing savings.