Could You Retire Today?
In a recent survey conducted by the Employee Benefit Research Institute, only 42% of workers report they or their spouse have tried to calculate how much they will need to save for retirement. Do you know how much you will need to retire and still maintain the same lifestyle that you have now? Many retirement experts estimate that your yearly expenses in retirement will be 80% of your annual pre-retirement expenses. Others estimate that your expenses will be 100% of your pre-retirement expenses – or more – because you’ll have more uncommitted time to spend money. Also, some of your monthly expenses will increase, while others will decrease. How much you will need to retire will depend on your individual situation.
So how do you go about calculating how much money you’ll need to retire comfortably?
First, you’ll need to Determine Your Monthly Expenses. Next, you’ll need to Adjust for Inflation. Let’s assume an average inflation rate of 3% across the 20-year period until your retirement date. Now, take the monthly estimate of expenses and turn It into a yearly estimate.
Multiply it by 12, and you have your yearly expenses at retirement. But now we must factor in the effect of inflation in retirement. Let’s assume that the inflation rate stays at a steady 3% annually over your 20 years of retirement, and your living expenses stay the same. By this calculation, $5,500 a month in living expenses today could grow to over two million dollars! That may mean you would have to save a lot more to see you to and through retirement than you realize.
To find out how much you need to save to enjoy the lifestyle in retirement you want, contact us for a no obligation consultation today.