How much do I need at retirement

This is the question that many people ask themselves every day, how much do I need at retirement. How much do I need to save to ensure proper quality of life for my retirement. Some people do not ask themselves this question until they are in their 40s or 50s. By that time it is much too late to save a large nest egg. Unless you have an excellent income with little expenses it is very difficult to save enough money once you have reached that age.

Regardless of what age you are now, now is the time to start planning for retirement. If you begin when you’re young in your 20s  save at least 10% of your salary. You should have more than $1 million for retirement. Add to that any pensions that you might have from the government. Also, your employer pensions and your quality-of-life should be what you are looking for.

How much do I need at retirement – Inflation

However, there is one item that must be discussed and that is the amount of inflation. There are many calculators that can be used to calculate how much you need to save for retirement and what the impact will be of inflation on the amount of income that you receive as a result of that savings.

For example, we recently read an article of a man who is 32 years of age and had already saved 125,000. He was assuming an 8% percent growth and calculated by the age of 67 that he would have $1.8 million.

Assume a 3% inflation and the 4% initial withdrawal rate. His pretax income in retirement equivalent in today’s dollars was only going to be $26,300. Assumed a more cautious 6% return instead of 8%. The income derived from the savings was only going to be $13,000 a year. This is not a lot of money and demonstrates why you must save on a continuous basis. This man was very fortunate to have saved $125,000 already saved however it demonstrates that he needs to continue saving to account for inflation and to derive the quality of life that he is looking for in retirement

Get started now, with your savings plan for retirement and use one of the many calculators that are available to calculate what your annual income will be based on the amount of savings that you have when you retire.

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