While many people understand the need to plan and save for retirement early, some others live their lives without any planning. Though the more wise ones know that they need to save; they often do not have the “magic figure” or the idea about how much is enough for retirement. That’s because, with the income they receive, they have too many things to take care of which includes the mortgages and living expenses. As such, they may not have enough money to keep aside for retirement. So the wise ones have a lack of resources to plan and save for retirement. And the not so wise ones have a lack of will to do so.
Whatever the category you may fit in, it’s high time you start planning early for retirement for a secure future as a senior. Life is full of uncertainties and you would certainly like to avoid a difficult situation or at least stay ready for it.
So how much money is enough money to save? Let us help you figure out.
Factors to consider
The first step towards retirement planning is to chalk out all possibilities and situations that you may face in the later stages of life as a senior. Based on your current financial ability and your current checks and balances you need to figure out how much money you can put aside. You need to take into consideration the things that you may have to pay for or the events that might take place in your senior years. Some possibilities that are common and often are a determinant of your retirement saving are:
Mortgages and Debts
You need to keep in mind the existing mortgages you’re paying for and other liabilities that you may have to take up later on in your lives. This may include a home improvement loan or a car mortgage or loan or any other type of liability that you may plan to take up later. Whatever you plan to take up, you need to ensure you keep some money aside for your current and future liabilities.
Inflation is one factor that you cannot control. You never know when your mortgage rates or your cost of living can considerably go up and if you have not planned well, you will have very little money to use. So while planning for retirement make sure that you are keeping in mind the inflation and the increasing cost of living that you may have to face.
Medical or Other Emergencies
Medical contingencies and emergencies may take up a major chunk of your retirement savings if you do not plan well and early. First thing is to ensure you have Medicare and Medigap plans to secure your health in old age. So money has to be set aside for that. Apart from that, you have to keep some money aside for any contingencies and eventualities that may be medical or something else in nature. The idea is to keep yourself prepared for any mishap or accident that may occur during your senior years.
Leisure or Travel Plans
If you are of the fun-loving types and have planned to tour some parts of the world once every year, you need to keep some money aside for that as well. Tours can be expensive and hence plan well and be money ready for the backpacker in you.
Now that we know some determining factors let’s see how you can save some money.
How to Save/Invest for Retirement?
You can start by putting some money in your savings bank account every week or every month. A better idea is to put a little amount of money in Investment Plans that promise some solid returns. That way you not only put some money aside as saving, you also have the chance of seeing that money grow and when you withdraw you have a good amount for your retirement. In an ideal scenario, you should have $40,000 to spend per year post-retirement if your pre-retirement income was $50,000 per year. But that may not always be possible. But the goal is to be at least closer to that.
To Conclude, we can say that it is the very need of the hour to start saving for retirement, whoever you are at whatever stage of your life you are at. Because if you fail to plan, your future as a senior will be in jeopardy. Start saving for your retirement today. Sooner the better.