February 14, 2022
It’s easy to daydream about life after post-work. Achieving it, however, takes hard work.
That’s right. Your retirement plan will depend on how you want it to look. As a general rule, plan on replacing 70% to 80% of your pre-retirement salary each year. For instance, if you earn $75K, you’ll need up to $60K in retirement… multiplied by how long you’ll be retired. In the US, the average woman lives to age 81.
Would it be possible for me to create my own estimate?
I have a very large number.
Don’t be alarmed. Don’t worry about saving everything at once. You have the opportunity to grow your money exponentially if you invest. It is better to start investing sooner rather than later. (Thank you, compound interest.) Make sure you don’t touch the money too soon. (Thank you, Future You for not touching it.)
You may find it easier to reach your goal if you set benchmarks. As a general rule, Fidelity recommends setting aside about one year’s salary by age 30. Once you set a forever OOO message, multiply the salary three times by 40, six times by 50, and eight (or more) times by the day it is set. Use Personal Capital FREE Retirement calculator to see if you are saving enough.
How can I speed things up?
- Contribute at least enough to maximize your employer’s matching contribution to your retirement account if your employer matches your contributions. The best money is free money.
- Transfer money to your 401(k) or IRA automatically, without the funds ever showing up in your checking account. By doing so, you won’t have to worry about forgetting to contribute or spending the money in the wrong place. Consult HR for help setting this up.
- Take initiative. Changing up your asset allocation can help you earn more money. However, higher rewards also mean greater risk. It’s up to you whether it’s worth it.
There is no set number that everyone must reach in order to retire. Create a personal, reasonable target by examining your current financial situation and picturing what it might look like in the future. You can then begin investing to get where you want to be as soon as possible.
Do you want to know more about retirement planning? Find out here.
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