In order to figure out exactly what you need to retire in comfort, it’s important to consider what kind of lifestyle you would like to live when you retire. Is travel important to you? Do you want to eat out regularly? How about entertainment? And do you want to move closer to family? If you answered yes, these questions can give you a better picture of the estimated income you might need in the future. If you have lofty expectations they you will need an adequate-sized nest egg to utilize. Alternatively, if you would rather live a lifestyle with fewer expenses, you should not need to save as much. Here are some additional tips about retirement savings.
Have Realistic Goals
If you are considering retirement or just trying to plan the best path, you will need to be realistic. This means that you should think critically about what you need to do to be comfortable. Consider that some costs of living will be reduced when you retire, others may increase. Specifically your health care expenses likely increase in retirement, so be prepared.
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Analyze Where You Are Now
Regardless of how you plan to live in retirement, potential retirees need to have an appropriate amount of money saved by the time they retire. You can think of your retirement the journey to a mountain summit that can be reached by a couple of different paths. If you have done everything you need to so far, your path may be clear and you should continue on in the same direction. If, your retirement savings are low, it is important for you to recalibrate and start climbing as rapidly as possible in order to reach your goals.
To determine where you currently stand, you need to answer the following three questions:
- How much money have I saved up until now?
- When do I want to retire?
- What is my annual income currently and much of it will I need in retirement?
When you answer these particular questions, the answers will help you determine how much additional work you will need to accomplish before you retire.
Start Early To Save Adequately
Saving the proper amount of funding is absolutely critical for retirement preparation. Here are some case scenarios that might help you with your own case.
Case Scenario: Adam
Adam is 25, and has only been working a few years before he decided that he needed to get smarter about his retirement. He lives in Tulsa, Oklahoma, where he earns around $45,000 per year. He currently has $5,000 in his savings account, and $5,000 in his 401(k). His employer has promised to match 100% of his retirement contributions to this account at up to 5% of his total income.
After thinking it over, he decided that he would be comfortable living a lifestyle similar to his current one when he retires. Assuming a good rate of return on his investments at 4% or more, he would need to save at least $176 per month from now until he turns 67 to retire comfortably. However, if he continues on his current path, he will be over $260,000 short of his retirement goal when the time comes for him to retire.
Case Scenario: Karen
Karen just turned 40, and has recently realized that she has not been focusing enough on her retirement. Fortunately, she has been able to put away a small amount of savings over the years. She currently has $25,000 in the bank and an additional $12,000 in a traditional IRA. She now lives in the city of Pittsburgh, where she earns around $75,000 income each year.
In order to increase her savings and minimize her retirement, Karen assumes she will have a 5% annual return. She plans on living modestly once she retires, and thinks her budget will be significantly less than it is today. Under this particular scenario, Karen must save about 7.5% of her income, or approximately $469 per month, from now until her 67th birthday to be ready for retirement.
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Attorney J. Price McNamara Handles ERISA Case Issues
If you live in or around Houston and need help with your ERISA case, Attorney McNamara has the skills and knowledge that you need to get the outcome you deserve. These types of cases can be complicated, expensive, and time-consuming. That is why it is so important that you get the right kind of attorney to help you handle your case as efficiently as possible. Call us now to get things started.
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