Are you planning before your retirement? How much money do I need to retire? is a great infographic that you might find interesting. If you are reading this in Australia be aware that the statistics are from the USA, but the issues are fairly similar.
Just like it is scary thinking of your life after college without a job, so is thinking about retiring without enough money to keep you living comfortably. This always leads to the question: What is the right age to retire? However, experts believe that the question we are supposed to be asking should be: How much is enough to assure us a carefree life after retiring?
The importance of planning before your retirement
The common myth is that one needs about $1 million to have a comfortable retirement. However, as indicated in a GoBankingRates report, this will depend on where you plan to spend your retirement years. For instance, living in Mississippi will see your million dollars last for about 25 years, while in Hawaii, you get only about 11 years. Clearly, this is not a one size fits all solution.
Oftentimes, those who are aware of the intricacies of retirement always plan ahead. It is because of this planning that we now have young retirees, unlike the traditional norm where people only retire because they’ve reached a certain age.
Different life expectancies
Our various diversities and cultures mean that there are different average retirement ages across the continents. One important factor that seems to play an important role in retirement decisions is life expectancy. Different countries have varied life expectancies as illustrated by a WHO report on World Health Statistics. This variance in life expectancy comes about depending on the common lifestyle trends.
When you consider saving for your retirement it is important to critically consider the various retirement plans available. The most popular options in the US include 401(k), Roth 401(k), Roth IRA and IRA retirement plans. These plans have varying characteristics and offer different tax benefits such as dividends, interest incurring, no tax liability and capital gains. Although most Americans opt for the 401(k) retirement plan, there is no rule that says you can only subscribe to one plan.
However, before you decide that now you need to get a Roth IRA retirement plan or any other plan for that matter, it is always good to have some tips to go by. For instance, always have a written retirement plan that is thoroughly drafted based on the kind of lifestyle you would like to enjoy after you retire.
On this basis, you should be able to estimate your expenses, while also factoring in the issue of inflation which, according to a report on The Balance, is about 3% per year. It is often advisable to save early and leverage on the total resources that are at your disposal.
Planning for retirement is not always going to be easy-peasy, and actually saving enough can be challenging, especially if you have additional expenses like high medical bills. But finding a perfect retirement plan that will work for you is not impossible if you’re well-informed.