How Much Money Do I Really Need to Retire at 55? Q: I’m 40 and can’t imagine working till I am 65. If I want to retire in my mid-50s, how can I make sure I have enough money to live a comfortable lifestyle? A: How much you need to put away depends on the kind of lifestyle you want in retirement. You’ll probably need less than your pre-retirement income because you’re no longer socking away a big chunk of your salary for retirement—and if you are aiming to retire early, you should how Much Money Do I Need To Retire maxing out all your savings options and more. Your income taxes will likely be lower and many of the costs associated with working, such as commuting and eating lunch out, will disappear.
But if you retire at 55, you’re looking at funding four decades of retirement. That means you’ll need a much bigger cash stash than someone with a standard 30-year time horizon, says Charles Farrell, CEO of Northstar Investment Advisors and author of Your Money Ratios: Eight Simple Tools for Financial Security. If you work till the traditional retirement age of 65, you should have 12 times your annual household income saved, says Farrell. If you’re not on track, it’s not too late. As you hit your peak earning years and big expenses fall away, such as college tuition for your kids, you may be able to power save, putting away much bigger chunks of money. Or you can adjust your goal. If you push back retirement to age 62, you’ll need 16 times your annual salary saved.
12 times your final income may be enough. Early retirement requires a willingness to stick to a lifestyle that allows you to save diligently throughout your career, while avoiding money drains like high interest rate debt. If this is your dream, it’ll be well worth the effort. Money may receive compensation for some links to products and services on this website. Offers may be subject to change without notice. Quotes delayed at least 15 minutes.
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Retiring early depends on one essential variable: your lifestyle. There’s a simple way to calculate how much you’ll need to have saved up before you can retire. Then, you have an idea of how much money you need to save to create enough returns to finance your retirement lifestyle. Keeping all your savings in cash won’t do the trick. Once you know your magic number, you can leave work as soon as you reach it.
Financial plans should be open, should help ensure that how Much Money Do I Need To Retire have enough income to maintain your current lifestyle in retirement. To figure out how much you’ll need to retire, 000 on out, there are so many imponderables: When will you retire? Do you stand to inherit how Much Money Do I Need To Retire large amount of money? We think you could retire confidently with the peace of mind we’re all after.
When determining your magic retirement number, be honest with yourself. To get to your goal, saving sporadically simply won’t cut it. 52 years before you can afford to maintain your lifestyle in retirement. If you’re 22 today, that means getting a paycheck until you’re in your 70s. Achieve that goal, and then you can turn your attention to perfecting your tan and your golf swing. Story From Motley Fool: Just how much money do you really need for retirement? A link has been sent to your friend’s email address.
A link has been posted to your Facebook feed. Just how much money do you really need for retirement? It’s probably a good idea to assume health costs will take a large chunk of retirement savings. One of the hardest financial questions you will ever face is figuring out how much money you will need in order to enjoy a comfortable retirement.
While coming up with an appropriate answer can be a bit of a challenge, there are some general guidelines that you can use to help you refine your answer. In trying to come up with a number for how much their clients need in order to retire, many financial advisors look at the issue completely backwards. It’s easy from an analytical viewpoint to take what someone is spending now and then figure out how much you’ll need in order to sustain that level of spending in the future, and that’s why so many of the rules of thumb concerning retirement income needs are so popular. The problem with that perspective is that it doesn’t address the fact that most people intend to have completely different spending patterns in retirement than they did during their careers. For some, expenses will drop because they no longer have to pay the costs of working, instead living modest lives with inexpensive tastes. For others, things like expensive hobbies and extensive travel plans could make expenses rise dramatically. The more pragmatic approach is to save as much as you reasonably can, invest well, and see how things work out.