Determining Your Retirement Financial Needs
The first stop on your journey to a secure retirement is determining your financial needs. Did you know that most people aim to replace about 70% to 80% of their pre-retirement income after they stop working? By matching up your post-retirement income with expenses, you can calculate the amount you’ll need for retirement.
Let’s break this down further.
Estimating Annual Spending Requirements
Planning to spend between 55% and 80% of your annual pre retirement income can be a good starting point for estimating your annual retirement needs. Don’t forget, an active retirement lifestyle with new activities like travel can increase your retirement budget.
By considering your personal finance, including day-to-day expenses, housing costs, food, and healthcare, you can calculate your ideal retirement savings. Following the steps for retirement planning will ensure you’re on the right track.
Planning for Inflation's Impact
Inflation, the silent wealth killer! It reduces the value of your savings over time, so planning for its impact is crucial. Historically, inflation has averaged around 3% annually, which means you’ll need a substantial increase in future income to preserve your purchasing power. There are strategies to deal with inflation in retirement that should be considered.
