Your total will depend on
- how far you are from retirement age
- how much you’ve already saved
- how much money you earn and spend
- your health
- other financial and non-financial factors
We also never know what the future will bring, no matter how prepared we think we may be.
There are, however, two quick ways to get a rough estimate of how much money you’ll need to settle down with.
Estimate Number One
This is by far the easiest way to calculate how much you’ll need to retire. All you have to do is take your current income and multiply it. But what should you multiply it by? Well, most financial experts say you’ll need between eight and twelve times your current income for your retirement. So, if you currently make 60k per year–for just yourself–you will need to have saved somewhere between $480,000 and $720,000.
If you’re looking to supplement your entire income with retirement–not the 80 percent most financial experts recommend–you may need to save even more. Of course, this method doesn’t take into account any additional savings you’ll have accrued by that point, or social security benefits.
Estimate Number Two
This estimate focuses on your expenses rather than your income. If you’ve already been using a budget to keep track of your income and expenditures, this method won’t be tough for you to calculate! All you need to do is take your current annual expenses and multiply them by 18, which is approximately the current average length of a retirement. The number is your total estimated expenditures for the course of your retirement.
Of course, we frequently adjust our budgets, and, especially if you’re under 30, your budget is probably going to change a lot by the time you retire. You may, for example, in the future, not have to be making student loan or car payments; instead, you’ll potentially have to budget for a mortgage.
Of course, these are extremely rough estimates. Until you get much closer to your retirement, you can’t really know just how much you’ll need. If you’d like to get a better estimate, numerous retirement calculators exist online; they will do the hard math for you! And if you’d like to talk it through, don’t hesitate to stop in at any Dane County Credit Union branch and speak with one of our member service representatives.