In order to assess what an individual will need to retire on, there are a few things that you have to be take into consideration . First, you must consider what you are spending at this very moment. Second, will you plan on traveling more or less during retirement? Third, do plan to change where you live during your retirement? It is these three factors that can drastically effect how much money you will need at this point in your life.
How Much Money You Spend Now
The reason one’s spending expenses are taken into account, not their income is simple. Just because someone makes a certain amount of money, does not mean they spend it all. Or it is the reverse case, in which you spend your entire pay check, and have no excess. In either case, it is important to try and save for your retirement, if you want a proper income to retire upon. Just avoid living above your means. Budgeting now will make a big difference if you really want a life after you retire.
Travel More Or Less
Traveling costs money so if you plan on spending more time traveling while retired, you will need the additional income. Make sure you factor this higher expense into saving more in your retirement fund. Those who do not travel currently, may have little knowledge of just how much extra income it will require so it is important to do your research – it will be your best friend. Everything cost money. The gas that runs your car cost money. Even all those routine car check-ups begin to add up. When you retire, this is a travel expense you can now use towards a different type of travel.
Will Your Housing Change?
By the time you retire, depending on your current age, your mortgage should be paid off. You can use the money you have been paying the mortgage with towards your retirement income. If you are still renting an apartment, you will save more by purchasing your own home. This is because, that home can be sold upon retirement. If you choose to downsize after retirement, you can sell your more expensive home. All that extra income can then be put towards enjoying your life as a retired individual.