This week, San Diego Wealth Management will be exploring the question of “How Much Do I Need to Save in order to retire?” in a series of blog posts.
Many Americans realize the importance of saving for retirement, but knowing exactly how much they need to save is another issue altogether. With all the information available about retirement, it is sometimes difficult to decipher what is appropriate for your specific situation.
Today we will wrap up our week of posts with: And the Total Is…
After considering all of the factors in the preceding posts, you should have a much better idea of how much you need to save for retirement.
For example, let’s assume the following:
- You will retire when you are 65 and spend a total of 20 years in retirement, living to age 85.
- Your annual income is currently $80,000, and you think that 75% of your pre-retirement income ($60,000) will be enough to cover the costs of your ideal retirement, including some travel you intend to do and potential health-care expenses.
- After factoring in the $12,000 annual Social Security benefit you expect to receive,
- a $10,000 annual pension from your employer,
- and 4% potential inflation,
- You end up with a total retirement savings amount of $760,000.
The estimated total for this hypothetical example may seem daunting. But after determining your retirement savings goal and factoring in how much you have saved already, you may be able to determine how much you need to save each year to reach your destination. The important thing is to come up with a goal and then develop a strategy to pursue it. You don’t want to spend your retirement years wishing you had planned ahead when you had the time.
The sooner you start saving and investing to reach your goal, the closer you will be to realizing your retirement dreams.
More information on Retirement Portfolio Lifespan
Please contact us with any questions that you may have.