Retirement planning is the preparation you do for life after paid work ends through financial savings and investments. You will be able to determine when to completely quit working and how much monthly income you will have after retirement and for the rest of your life. The goal of retirement planning is to achieve financial independence and to not return to a paid job unless you want to not due to financial stress, burden, loss or lack of income.
Why start retirement planning now:
- Fewer than half of Americans have calculated how much they need to save for retirement
- The average American spends roughly 20 years in retirement
- The sooner you begin saving, the more time your money has to grow
- You will be able to keep your current lifestyle after your retire
- Knowing how much you will need in retirement will help you determine how much you need to save now
- The longer you put it off, the greater the distance between you and your retirement goal
- If your projected retirement expenses exceed Social Security and pensions by $20,000 a year, you might need a nest egg of $300,000 to $400,000 to bridge the gap
- More than half of people underestimate the income they will need in retirement
- Most people will need at least 70% of their income saved to live comfortably in retirement
- Example: If you save $300,000 towards retirement that will give you an annual income of $12,000 till the age of 90 if you retire at age 65. Is that enough annual income for you?