Retirement is often times comical and the jokes people make always seem to make me laugh. So I thought this article would be best if
What are you saving for?
If you want to start saving for retirement, you need to first identify what you’re saving for. Obviously, plans change. When you start saving to travel around the world, you might find yourself just wanting to build a nice house in California near the wineries. Saving for a pretty cool big, rustic house might be your goal. Then, you might decide you want a “tiny home” instead. Maybe your retirement funds are aimed at opening up your own restaurant … then you decide you hate listening to people critique the food. My point is to define something you might want to do. It would be way better to have more money for retirement than not enough.
Calculating the cost
Now that a goal or dream is in mind, how much will that cost? Let’s look at a retirement calculator for an example.
Let’s say that I went and got a Bachelor’s degree when I left high school. So a Bachelor’s degree is the highest level of education I have. Since most people graduate high school at 18, this means after college one would be about 22 … congrats! You hit a good job, so you get $80,000 a year. Well …
- Age: 22
- Income: $80,000
- Savings: None (just starting)
- Percent of Income for Retirement: 15%
- We are going to spend the same amount in retirement as we do now
- Retirement Age: 65
With these numbers, we need $5,667 saved a month for retirement. We also would retire at 67, not 65.
You can see how critical it is we start saving. We started at 22 and saved 15% of our monthly income and STILL didn’t have enough! But the question now is “why do we need to save ___ much?”
The normal advice people give is to shoot for 70% to 90% of your full-time income per year for your retirement per year. In the calculator example, this means we need anywhere from $56,000 to $72,000 a year to retire comfortably. Which is why on the NerdWallet calculator, I have to say I disagree with selecting you’ll spend less. Mainly because you shouldn’t aim to “make enough money to retire comfortably… oh, well, I probably won’t spend as much. Now I don’t have to save as much per month and will have more money now!”
Don’t ever shoot to just “make it”. If we have to go through life with education, training, experience, and more just to get a well-paying job, we’re going to enjoy our retirement! To heck with just “making it”! Retirement should be enjoyed! It is the reward of all the hard years of work you put into it. So making the most of each and every day should be the goal.
A lot of times when I was younger, I would notice that more and more people weren’t prepared to retire. It’s almost like the college thing. Back in the day, people didn’t have to go to college to get a good paying job. To make the money, afford a house, have a family, and more you didn’t need a Bachelor’s degree. Much less a Master’s or Doctorate. Now, everybody is trying to be a doctor, engineer, dentist, lawyer. The jobs “where the money is at”.
Retirement kind of works the same way. People used to not really pay attention to it. I don’t know if it was just general lack-of-interest or they weren’t informed. Or they just didn’t care. Now you can see those older people working full-time at 60’s and 70’s. Maybe even older! Then, once they retire, they go BACK to work part-time. That’s a “no” for me. Invest in yourself and your future self will thank you for it.
Seek advice from financial advisers
One of the worst things you can do is wait. Waiting is the sworn enemy of retirement savings. With this in mind, it is wise to talk to financial advisers as far as how to get to a comfortable state of retirement. They can access your goals and guide you down the right path. Whether you work to acquire more wealth, budget efficiently, or just generally answer some questions you have, these advisers can do all of that and more!
Advisers can be found in various places and ways. For instance, you can find a series of advisers at a corporate/franchise financial planning business. Or, there are local ones who specialize in the locals near them. If you like a sound and numerous team, corporate franchise advisers are your go-to. If you value knowing a good bit about your adviser, even outside of his work, local ones suit you well. Do research on each institution and company before making the leap!
To answer “how much do I need to retire?” is all grey area, no black and white. It is all specialized and conformed to the person who is retiring. Follow the advice of 70%-90% and use an income figure to base it off of. I’m positive that Warren Buffett’s retirement percentages and mine are completely different. “Use 70%-90% of your yearly, full-time income per year you plan to be retired” is a math formula, but the answers are each independently and separately inside of us.