Estimating Your Nest Egg
How Much Will You Need To Retire?
September 30, 2014
We all know that we need to save money for retirement. But just how much should we be setting aside?
Many financial advisors say that you should plan on needing some 60 to 80 percent of your pre-retirement income. Of course, a lot will depend on what you plan on doing—are you going to travel the world? Or is staying close to home more your style? Will you keep the home you have, or move into a retirement community? Whatever they are, take into account your retirement dreams so you can set aside enough money to make them come true.
Use a calculator
If you’re like me, you’ll need some help when it comes to doing the math involved with all of this. Thankfully, there are many online options, from the Social Security Administration to AARP to US News and World Report. These will calculate your contributions, and also things like interest and fees. This makes it much easier to see just where you are and how far you have to go.
A few other things to keep in mind:
- Save whenever you can—Use windfalls like bonus pays for military, or tax returns, to build up savings faster.
- Keep more of your money—Ask about fees and other costs associated with certain investments, as they can take a chunk out of your nest egg.
- Taxes are inevitable—Remember that Uncle Sam might take a bit in taxes depending on the type of investment, so keep that in mind when factoring in income levels after you retire.
- Start early and stop late—We all want to retire early, but putting it off for even five more years can greatly affect how much you need to save. Basically, the earlier you start and the later you retire, the less you’ll need to put away in terms of sheer dollars.
Not everyone needs to retire a millionaire, but the more you have socked away, the more likely you are to enjoy your golden years.