It’s a common worry most people have when it comes to retirement: will you have enough money saved to live comfortably? Perhaps just as important though is: how do you know how much to save? The answer will be different for everyone and will be based on a few key questions you need to ask yourself when designing your retirement plan.
This does not constitute advice and advice should be sought in all instances before acting on it.
Finding your retirement number
Your magic number for retirement will be dependent on a few things, such as your family, your income needs during retirement, how long you plan to be in retirement for, etc. Obviously, it would be difficult to pinpoint an exact number that will last you the entire time, but by having a plan and steps to get to your number, you put yourself in the best position to live the retirement lifestyle of your dreams.
Picture the life you want to live
It’s easy to remember all the big things you’ll need to ensure you save money for, but don’t forget about the little things. It’s important to think about every aspect of your lifestyle and whether or not you want to continue living that way during retirement. Are there certain costs you won’t have to account for once you stop working? Are there things you know will cost money that you want to keep doing or pick up during retirement? If you already have a budget you’re working with, this shouldn’t be a difficult task, but it’s crucial when planning how much money you’ll need down the line.
Start by looking at how much money you’re bringing in now and all your expenditures. Can you sustain your spending with a reduced income? What can you live without and what’s essential? Of course, some expenses will naturally fall off when you don’t need to work anymore, but you’ll need to account for housing, food, utilities, and anything else essential. If you expect that your lifestyle won’t change much and you’ll need an income close to what you’re earning now, be sure your savings will reflect that in the end result.
Do you need to step up your saving?
One way to evaluate if you’re on track is to check how much you’re currently saving each month. It’s always best to start saving toward retirement as early as possible, even if it’s only a little bit. As soon as you’re able, consider stepping up how much you save because the more you have invested and the longer it’s invested, the better chance it has to grow, making it more likely you’ll hit the number you need to live the retirement you want.
How long will your money last
The average age for life expectancy just keeps going up, so chances are you might spend a few decades in retirement and your retirement pot will need to reflect that. The length of your retirement is a crucial factor in figuring out how much you’ll need to save, and it might take some time to work out exactly what that magic number is, but careful planning and budgeting is exactly what needs to be done to help get you there.
Need help getting and staying on track?
If you need help building a retirement plan and most importantly, putting it into practice, don’t be afraid to speak to us. We’ll give you peace of mind by helping you put a build and follow a plan so you can make the most of your retirement.