There’s plenty of retirement advice out there and of course your level of savings will depend on your individual goals, your current income and anticipated other costs in retirement, such as whether or not you will still be paying for a mortgage. Generally, experts recommend that your retirement income sits at about 80% of your final pre-retirement income. This means that if you make $100,000 a year at the time you retire, you would need to have enough funds set aside to pay $80,000 per year to provide you with a comfortable lifestyle after leaving the workforce.
Remember that there are many different assets that can be considered as part of this, such as pensions, social security and retirement savings. Furthermore, you may also continue with part-time employment to help you achieve your desired lifestyle.
Another easy to use formula worth remembering is to divide your desired annual retirement income by 4% to follow the 4% rule. This can help you to determine the overall nest egg you need set aside in order to live a lifestyle similar to the one you would be living at the time that you choose to retire.
Remember that in order for the 4% rule to apply across the board, you must stick to it year in and year out. This means that this 4% withdrawal from your overall retirement account must be enough to cover all of your general expenses across the year. This is a good reminder to revisit your budget and to consider whether any other extraneous expenses could require you to adjust the amount that you have set aside to save and the amount you intend to withdraw. If you need help making sure you’re on track to achieve your retirement age and personal income goals, now is the perfect time to meet with your financial professional to discuss next steps.