How Much Will I Need For A Secure Retirement?
3 February 2006How much will I need to enjoy a safe and secure retirement? That is the basic question and one that vexes many people. It’s not an easy question to answer since your precise needs are not clear until you actually retire. But, you can estimate how much you will need and that is the subject of this part of ISR.
Figuring out how much you will spend in retirement is probably one of the most difficult tasks we all face. And, probaby one of the reasons so many of us don’t properly prepare for retirement. A multitude of factors complicate this task. Here a just a few:
- Age
- Marital Status
- Family Size
- Where We Live
- Home Ownership
- Health
- Personal Desires
Our inability to come up with an exact answer doesn’t mean we can’t and shouldn’t develop an estimate of our needs and use that as the basis of our planning.
A common rule of thumb that has been around for many years was to plan for 80% of your current income in retirement. That may work for you, but times and attitudes about retirement have changes so it may not. And, using your current income as a gauge for retirement needs only works if you are approaching retirement. Personal desires come strongly into play as well.
Many of us are planning on much more active retirements, given longer life expectancies and improved health care. As a result, we will most likely spend more in retirement than our parents did and invalidate the 80% rule of thumb. You may want to travel. Or maybe you will be able to find the time to pursue that favorite hobby. Many have started familiies later in life and will have school age children in retirement. Whatever our plans, it is conceivable and probable that we actually may spend more in retirement than while working.
If you’re just starting a career, you have an entirely different set of calculations to make.
2 Responses to “How Much Will I Need For A Secure Retirement?”
February 11th, 2006 at 9:51 pm
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February 11th, 2006 at 9:54 pm
testing trackback…
haven’t tried trackback before, but wanted to let Tim know that i’ve posted some info on investment and that I love you’re info in retirement investing
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