When it comes to retirement planning, there is no one-size-fits-all answer. Generally speaking, most experts agree that you'll need between 70 and 80% of your pre-retirement income to maintain your standard of living during retirement. To calculate your monthly retirement expenses, you can use the 4 percent rule. This rule suggests withdrawing no more than 4 percent of your retirement savings during the first year of retirement, and then continuing to withdraw the same amount in the following years, adjusting for inflation.
A good rule of thumb is to save 15% of your annual earnings. Ideally, you should start saving at 20 and continue throughout your working years. This should give you enough to live comfortably in retirement, but if you want to build your dream home, travel the world, or pursue a degree, you may need more than 70% of your pre-retirement salary. Schwab recommends a savings rate of 10 to 15% if you start saving at age 20.
When deciding how much you'll need when you retire, you should consider your personal financial goals, retirement expenses, and future travel plans. Most retirees have several sources of retirement income, such as investment accounts, government program payments, and retirement account distributions. According to the Transamerican Center for Retirement Studies, 48 percent of U. S.
workers expect their primary form of retirement income to come from their personal financial assets.Working with a qualified financial advisor can help you create a plan that meets your individual retirement goals. Alternatively, you can plan to retire somewhere with a lower cost of living to make your money last longer. For example, Michigan's average retirement age is 62 and its average life expectancy is 77.60 years, meaning the average person should expect to live retired for 15.6 years.When planning for retirement, there are several variables to consider when determining how much you need to retire comfortably. All of these optimistic possibilities would generate a larger retirement fund and reduce living expenses during retirement.So after adding it all up, if your total retirement income exceeds your expected expenses, you probably have enough for retirement.