One of the first questions people ask when first thinking about retirement is, "Well, how much will I need to retire?"
As far as retirement questions go, it's a good one. And while everyone differs in their retirement needs, there are still some ways for you to get a roundabout number to begin planning your retirement future.
The first step is to figure out how much you plan to live on. AARP recommends taking a look at your current budget.
The 80 percent benchmark may be the best place to start to at least get your head around the actual amount. This means that if a future retiree currently make $100,000 annually, he or she would need to invest appropriately so that they are generating about $80,000 in annual income, plus increases to adjust for inflation.
"A much-touted rule of thumb says you'll need 70 to 80 percent of your preretirement income after you finish working," according to AARP. However, they do note that even that might not be enough, suggesting that spending really doesn't slowdown that quickly once you initially reach retirement.
How long should you plan for? According to CNBC, the current average man who is 65 is expected to live until 84 and the average 65-year-old woman is expected to live to 87. This means that the current retiree should plan to live on their investments for about 25 years post retirement.
Keep in mind that some retirees also decide to continue working part time during their retirement and some find that, once their homes are paid off and their children leave the nest, they have far less expenses than they used to have when they were in the full-time workforce.
And while there are numerous retirement calculators online, they usually only deal with a few numbers and don't take into consideration the myriad choices a retiree can have when planning for their future.
Planning for retirement should never be left up to a rule of thumb and averages. Each and every retiree has their own specific set of circumstances that will affect how they need to plan for their retirement.
Contact Steel Valley Investment Group of Raymond James for more information on how you can get started planning for your retirement today.
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