Have a relaxing and stress-free retirement requires a large amount of careful planning for it to be successful. Each person has a unique situation that must be evaluated when trying to achieve the goals they have in mind. The key to estimating how much you will need in retirement is to plan for the areas you will need to spend.
Start With Your Needs
In order to know how much income needed in retirement, you have to start by evaluating your current expenses. You can do this by identifying all the items you are currently spending on as well as which ones will discontinue or arise after you retire. Once these expenses are accounted for, the most important part is to predict how these expenses will change over time. How much will your healthcare costs go up? Will you be able to pay off certain debts while in retirement? These are some of the questions you should be asking in order to plan out how much spending money you will need. Another important aspect is to consider inflation, which will weaken the value of your spending money by roughly 2% every year according to historical data.
Construct a Timeline
After needs and potential changes have been estimated, you must determine how many years you are going to have to fund those needs. The start of this timeline is when you choose to retire, and the total timespan will be your life expectancy. Retiring is a decision that you are going to be able to make based on how much you have saved at a certain time. Working for an extended period will not only keep your salary longer but also give your investments more time to take advantage of compounding growth. It is important to have a surplus of money above your needs as a cushion in order to ensure that no surprises will deter your goals from happening.
Talk With a Professional
Retirement planning is no easy task due to the many factors that come into the decision. If you have any questions about your retirement needs or when you will be able to retire, our team of experts are available to assist you. You can call us at 513-241-8313 or click here. We look forward to hearing from you.