NEWSLETTER
Making plans to retire is not something that can, or should, be done by whim. Years of prioritization, calculation and savings are needed.
Before leaving for the last time, one of the most important numbers you need to have at hand is an estimate of your annual expenses.
It can be difficult to predict how these numbers will see when collecting social security in retirement, since many external factors play a role in calculations. But making a plan that keeps into account if you intend to spend more, spend less or spend approximately the same amount is a good place to start.
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When you make your expenses list, be sure to take into account your unique situation. Do you prioritize trips? Do you plan to help pay your grandchildren's registration bills? Would you like to buy a new car? Each of these lines will depend on their spending priorities.
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Jean Chatzky's advice on how much money is needed for retirement
Once you reach your reference number, determine whether you intend to spend less In retirement. If that is the case, multiply your total annual expenses at 0.75.
If you intend to spend approximately the same amount you spend today, you multiple your total annual expenses by 0.85 percent.
And if you intend to spend more on retirement, you multiple your annual expenses at 0.95.
Once it reaches the total for any scenario, multiply that number for the number of years that intends to be withdrawn. The average retirement duration for a person in the United States is 18 years, according to Guardian's life.
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Here is an example: Suppose that currently spends $ 5,000 per month in the foundations such as housing, insurance, food, medical care, entertainment, public services and transport. Annually, that is $ 60,000. If you intend to spend less In retirement, multiply its total by 0.75. That goes to $ 45,000. If you intend to retire for the average period of time, 18 years, you will want to have a minimum of $ 810,000 in retirement funds at hand before retiring.
Keep in mind that some costs will probably only increase as the years go by. Medical care costs, for example, rarely fall. On the other hand, if you are close to paying a mortgage, that is a monthly budget line line that you can clean from your balance.
“Knowing where your money could come to cover your retirement is essential,” said Jean Chatzky, author of best -selling personal finance in an interview with AARP.
It is a critical step to help you prepare and also feel safer to have enough money through retirement.
Chatzky, who is also the host of Hermenal Podcast, worked with AARP to create a verification list prior to retirement that will help future retirees to track all numbers. (Fidelity has a Free retirement income calculator You can use to run your own scenarios).
Jean Chatzky shares the three typical retirement income sources
Chatzky says that there are three main sources of retirement income that will help him reach his monthly requirements.
“First, there is a job paid,” she says in AARP's interview. “And one thing we know is that many people continue to work during the 'retirement'. Some are doing it because they need money, but others are doing it because they like it.
Then comes Social Security, the retirement benefits that he has won working and contributing to the Social Security system over the years.
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“And finally, there are his savings and his investments, the money he has gathered over the years and has invested to grow,” Chatzky said.
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Chatzky also worked with AARP to create a pre -retirement verification list that includes a series of “action steps”, which can help people plan retirement to the task. The steps include:
- Calculate your estimated amount of money in retirement;
- Calculate your current amount of retirement savings;
- Configure or review your Social Security account in Myssa.gov;
- Contribute at least enough to your 401K retirement to obtain the coincidence of full employer
- Save and invest in Ira/Non -labor retirement accounts.
“When it comes to planning retirement, what you really need is a clear image of what you have. You need to know where it is to get where you want to go. Therefore, the way to follow is the first to collect all its most recent statements of your accounts or to visit your online accounts and add current values, “Chatzky said.
“There is still time to increase your money and close the gap between what you have and what you are finding that you probably need,” Chatzky said.
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