If you are saving for retirement, you’re already ahead of many Americans who either haven’t started or haven’t put much money into their retirement plans. It is impossible to say exactly how much money you need to put away for retirement since each person’s situation is different. With the help of a financial adviser, you can determine how much to put away.
Before determining how much money to set aside for retirement, you need to figure out what you plan to do in your retirement years. You may want to travel the world, spend your days at the golf course, hone your gardening skills, or spend time with your grandkids. Whatever the reason, you need to decide how much money you need to support these activities, and use that to set your goal.
For basic needs, it is recommended that you have enough savings to supply 70 percent of the income you received in your working years. For example, if you earned $100,000 at your job, you should save enough money to supply yourself with $70,000 per year. You should expect to have fewer expenses while retired than when you were employed, such as work-related travel expenses, a mortgage and saving for retirement.
How much to put away for retirement also depends on how long you expect to live. As of 2011, the life expectancy of an average American is just over 78 years, according to the CIA World Factbook. If you plan to retire at 65, you need to ensure you have enough savings to last you at least 13 years. However keep in mind that the average life expectancy rises over time, so you may be expected to live longer, meaning you have to save for a longer period of time.
Working with your financial planner, you must come up with a budget so you can put money away for your golden years. Say you require $50,000 per year in retirement and you expect to live for 15 years after retirement. You need to save a minimum of $750,000. Determine how much to put away each year and invest it so it can grow to reach your goal.