How to Estimate How Much Money You Will Need To Retire

Video Transcript

"My name is Julie Asti and I am a Certified Financial Planner with Asti Financial Management and I am here to talk about how to estimate how much money you will need to retire. Estimating how much money you are going to need to retire on is really kind of a complex calculation and it is really tough to do on your own. You definitely would probably need the services or to use some kind of an on line tool because there is going to be projections that you are definitely going to have to be doing but really when you are looking at how much you need to retire there are, it is kind of a simple equation that you start out with. What you are really going to be doing, what your income need is going to be or what you income goal is for example if you are earning and you are living on $100,000 your income goal on retirement is going to be $100,000, that would be your income goal. You are going to want to take a look at the income sources of income that you have, that could be Social Security, it could be a pension it could be a trust income. It could even be part time income but you are going to want to look at what your income is and then you are going to want to subtract out all the sources of income that you are going to have coming in and what that is going to do is provide you with that need. So let's say you have $100,000 as your income goal and you have $50,000 that is going to be income coming in to you from various sources, your net need in retirement is going to be $50,000. What you are going to need to do then is to find a way of how are you going to be able to provide yourself with that $50,000. Most people then would look towards their nest egg or their assets, their investment accounts to be growing over time so that they could then withdraw $50,000 annually to be able to help them meet their income goal. There are many many other variables in taking a look at estimating the amount that you are going to need to have during retirement and your income goal if you are living on $100,000 today you are going to have to incorporate the rate of inflation. You are also going to be looking at forecasting how much your assets are going to grow between now and then. Is it going to grow at 8% or 7% so that you can forecast what your nest egg is going to be when you retire. You are also going to want to take a look at the sources of income that you have coming in today and again those aren't going to be the same they are going to grow at various rates of return, your pension may say have a stated interest rate of 2% over time whereas Social Security historically is growing at 3% or the consumer inflation number. So there are a lot of complex variables that running the numbers on your own is going to be complex so you are going to want to look for a site on line that you can plug in your income goal, the amount of assets that you have and your desired retirement age so that you can start taking a look at what the projections are for how much you will need to be saving now and how much you will need to have saved for retirement by the time that you get there. My name is Julie Asti. I am a Certified Financial Planner with Asti Financial Management and you can learn more about my services or my company at www.astifinancial.com."