How to set an appropriate retirement goal
- Find out how much it takes for you to retire.
When calculating how much money you need, you want to consider what you would spend if you were retired today. You should take into account any savings you have, the amount of interest you receive on those savings, the cost of living, and any expenses you incur while working.
- Determine how long you plan to work
If you plan to retire at age 65, then you may not need to save as much money as someone who plans to retire at 55. If you expect to continue working until you’re 75, then you might need to save even more than someone who expects to retire at 65.
- Add up your monthly expenses
Once you know how much money you need each month, add up your total monthly expenses. These could include mortgage payments, car payments, student loans, credit card bills, insurance premiums, utilities, childcare costs, groceries, clothing, entertainment, medical expenses, and anything else you pay out of pocket.
- Subtract your monthly income
Next, subtract your monthly income from your total monthly expenses. This gives you your net monthly income. Divide this number by 12 (the number of months in a year) to determine how much you need to save each month to reach your target retirement date.
- Adjust your savings rate based on your goals
You don’t necessarily have to save 100% of your net monthly income. Instead, you can adjust your savings rate based on whether you’re saving for a specific purpose. For example, if you want to buy a home, you’ll probably need to save more than someone who wants to travel the world.
Get your retirement plans with a secure retirement with trustworthy financial advisors
Retirement calculators help people figure out when they should retire based on current savings levels and projected spending needs. They also provide guidance about what kind of lifestyle changes might need to happen as well as whether more money needs to be saved. While most retirement calculators work well, some may be missing key factors such as Social Security benefits, health care costs, inflation rates, or tax implications.
Get your retirement planning can be achieved with one of our trusted members, Bodie Murray from Northwestern Mutual in Phoenix. Check with an expert if you can take into account retirement benefits, tax benefits or pension benefits for you. Call him today!