As with all other successful ventures, the foundation of a good retirement in old age is planning. Since retirement entails the permanent withdrawal from active working life, it is important to plan ahead and ensure that you are stable before retiring. This is because as much as having something to live for makes retirement fabulous, having something to live on is very important.
As to when you should start saving, the recommended age is in your 20s when you begin receiving your paychecks, as the earlier you start saving, the more money you accumulate. You save while you still have some money coming in from your occupation, and it is never too late or too early to start saving. Planning for retirement will have you sit and evaluate your life, and decide on what you would be willing to sacrifice to make that big retirement dream come true. It will require you to put in the work to work towards that future dream.
Retirement decisions, including how you get to spend the years, is a very personal choice. This means that as much that one saves or spends for retirement will vary from person to person, depending on the goals they would wish to accomplish come that time, with the retirement age being 55 years on average.
An adjustable retirement calculator can come in handy to help you work out your savings estimates over a period of time. Depending on your objectives, it can guide you on the ideal amounts that will help you achieve that desired retirement income.
How Does a Retirement Calculator Work?
It is very easy to use one. All you need to do is feed in some basic information as per your goals into the calculator, and it works out the details for you. Here are some of the details you will be required to fill in:
- Your current age and your preferred retirement age
- Your planned savings amount per month
- Input any amount that you might have saved up at the time
- Choose the expected rate of return (ROI) on the investment
- Indicate the expected rate of withdrawal per retirement year
- Indicate the desired annual retirement income per your predictable expenses.
The calculator will produce the desired annual retirement income and the yearly retirement you will have to help you make an informed retirement decision. So, whether your objective is to retire in a handcrafted cabin home or travel the world over, you can plan early enough and take realistic saving steps towards attaining it.
3 Major Retirement Saving Tips
1. Dream Big
It would help if you took a personal responsibility towards your retirement, and that entails having a vision and a plan on how to go about it. Think about that one thing you would wish to wake up to when the retirement years come and go, then look into what you would be willing to do to make it happen. Most of the time, it will require that you make some sacrifices to make that dream come true.
2. Start Saving Early
The best time to start saving is as early as you have a paycheck coming in. It does not matter that you can only afford to save a little amount as long as you start. This is because saving is a habit, and when you start early, the saving instinct grows with you, and you will be committed to your retirement saving. Seeing the compound interest magic making your account balance grow will have you feeling good about saving.
3. Create a Saving’s Budget and Follow It
In deciding how much you should save, the answer should always be as much as possible. Most advisors will tell you to save 15% of your income, but then again, the kind of inheritance you desire and how long you wish to work should greatly influence the amount. Keep inflation, rising prices, and health costs in mind as you plan as these can greatly burden your finances. An investment professional can help you with an insight into this and share tools with you that can help you remain on track with the plan you settle on.
Bottom Line
The most significant step you could ever take towards your retirement is starting. Whether you start big or small, start anyway, and be consistent with your savings. Also, do not save blindly. Have an objective in mind and a sound plan to back it up. An investment professional can help you work it out.