Find Out How Much Do You Need to Retire

"How much do you need to retire?" It’s a really interesting question.
Most young adults who have just begun careers are focused on enjoying life at present and paying off their college loans while making ends meet. Retirement is usually the last thing on their minds. They would probably give you a blank stare when asked “how much do you need to retire?”
Yet that same question hovers in the minds of people who are nearing their retirement years. Sometimes people realize the value of saving up for retirement early on, while others may not until a later time.

By then, they may have a lot to catch up on.

Planning for your retirement begins with finding out how much you need to retire. Financial planners say that our retirement savings should be equivalent to 75% of your pre-retirement income in order to maintain your current standard of living. Yet what does this really mean for you? Can you look past the technicalities and see how much you need to retire?

When you retire you won’t have your regular job but you still continue to have basic needs like food, clothing and shelter. You will still continue paying for your household utilities. If the house you are currently living in has not been completely paid off yet you are going to have to finish paying the mortgage. Nothing much changes when it comes to your financial obligations except perhaps for the taxes that may increase with inflation. Hence, you can pretty much calculate the expenses you will incur for your basic needs, utilities and housing each month. If you will maintain the same standard of living as you presently do, you can already make a forward calculation of how much you will be spending during your retirement years. However, if you want to downsize your standard of living upon retirement, you would end up spending less each year for your retirement.
While the rest of your needs are steady, your health care needs will change as you get older. More trips to health care facilities can be expected. Upon retirement, you can rely on your Medicaid to cover only a fraction of your medical bills. The rest, you will have to pay for out of your retirement money. Healthcare should always be part of your calculations in determining how much your retirement expenses will be.
If for example your calculations arrive at an amount of 40,000 USD worth of expenses annually, then that pretty much tells you how much you need to retire. For a retirement period of around 30 years, that means you will be spending around 1.2 million and that is something you have saved for way before you ever decide to retire. That is quite a lofty amount to save up for and it basically answers question “how much do you need to retire?” The good thing is the earlier you start saving up for that target amount, the smaller the amount of money you put off for retirement on each payday.

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