Saving for the golden years is essential if you want to maintain a comfortable lifestyle, and there are many tools to do so. When it comes to the amount, how much is enough for my retirement?
Estimated retirement age
Your planned retirement age greatly influences your finances. To take full advantage of social security benefits, the retirement age ranges from 65 to 67 depending on your birth year. Although you can start drawing benefits as early as age 62, your monthly benefits will reduce significantly. If you were born in 1960 or later, your retirement age is 67. If you were born earlier, use this tool to help you determine your retirement age. There is a rule that generalizes savings depending on age, and it says you should save the following based on your annual salary:
- 1x in the 30s
- 3x in your 40s
- 6x in your 50s
- 7x in the 55s
- 8x in the 60s
- 10x by 67
How much is good?
Although different variables play a role in determining how much money is convenient for you, the lifestyle you want to lead at this stage of your life is key to defining the right amount for retirement. (sentence deleted) Experts say your retirement income should be about 80% of your pre-retirement income. This means that for every 10 USD gained before retirement, you will need 8 for this stage.
Another indicator is the 4% rule, which suggests that you withdraw 4% of your retirement savings for living expenses. However, Morningstar experts say 3.3% is enough to make your money last for 30 years.
It is never too late to start saving for your retirement. (sentence deleted) Even if you can’t allocate as much each time, the important thing is to get closer to your goal to live the way you wish to in your future.