How to calculate your needed retirement savings
One of the most essential things to understand about the retirement process is that you cannot afford to allow such a life changing event to “sneak up on you.” Retiring the way you want requires years of planning and preparation, particularly as far as your savings are concerned. Thankfully, the process for how to calculate retirement savings is actually a lot more straightforward than most people assume. It CAN be done – you just need to keep a few essential pointers in mind to make sure everything you need is accounted for.
Understand the Variables, Understand the Process
The most important thing to understand about your retirement savings is that there really is no “one right way” to go about making sure your financial future is taken care of. There are a wide range of different variables that influence how much you need to save and by when – but these shouldn’t be a cause of stress. They’re actually the key to making sure you come up with the plan that works best for you and your loved ones and once you understand them, you’ll also begin to get a sense of just how easy the process can be.
For example, you’ll need to think about all of the following factors:
- Your current age, which obviously impacts the amount of time you have to save for retirement.
- The age you want to retire, for essentially the same reason as outlined above.
- Your current annual household income, which impacts how much you’ll be able to save.
- Your annual retirement savings.
- The starting balance in all of your combined retirement savings accounts.
- Any expected income increase (think: raises and bonuses) that you’re anticipating over time.
- The total years you plan to spend enjoying your retirement in prosperity and comfort.
Once you go through and determine the values of all these factors, you’ll have everything you need to know what you need to save each year to have the retirement income you need. Keep in mind that this will also be before things like Social Security are accounted for, so that will certainly go a long way as well.
If you’d like to find out more information about how to calculate retirement savings, or if you’d just like to register for one of our free educational workshops to help guarantee you’re ready when the big day finally arrives, please don’t delay – contact Fortified Retirement today.