What's the Magic Number for Retirement?
Saving for retirement but don’t know what to aim for?
Considering a retirement planner in Ann Arbor to make sure you’re on target for a comfortable retirement?
Trying to figure out the magic number you’ll need to save to retire on time?
The concept of saving money is easy, but attempting to calculate the amount you need to save to retire comfortably and on time quickly gets complicated. The sheer number of factors and unknown elements at play are beyond anything you could solve with high school algebra. That’s why it’s so appealing to simplify and generalize retirement savings’ goals to a magic number: it gives you something to shoot for without getting too bogged down in the details.
How to calculate your magic number for retirement
A good rule of thumb in the industry is to work to save the equivalent of ten times your final salary by the time you reach retirement age, or 67 years old. Saving this amount will put in you in good shape to sustain your standard of living through retirement.
It’s unrealistic to think you’ll get to the magic number if you don’t start saving as early as possible. So here are a few benchmarks to consider throughout your life and career.
- In your 30s, have a nest egg of about 1-3 times your income.
- In your 40s, increase your savings to 5 times your income.
- By your 60s, have at least 8 times your income saved and securely invested.
The truth about the magic number is that it’s just an estimate.
Where the magic number falls short.
The magic number for retirement savings is a good place for people in their 20s, 30s, and maybe even 40s to start thinking about what they’ll really need in future. But as retirement age draws nearer, you need to start thinking about a more complex formula that factors in your reality instead of generalizing.
Here are a few factors the magic number doesn’t consider but are important for you to get the most out of retirement:
- Downsizing or relocating for reduced expenses.
- Social security benefits.
- Health care costs.
- How long you’ll live.
- Retirement age.
- Leaving an inheritance.
An expert on retirement in Ann Arbor is great resource to help you make a realistic plan based on your life and expectations for the future.
Taking advantage of a firm of friendly experts on retirement in Ann Arbor means you’ll have a retirement plan tailored to your unique situation and desires. You’ll discuss everything from your plans for housing to medical history. This will help build the clearest image of what your retirement looks like and how you can get there.
The magic number is a great place for people to start thinking about retirement. But when more concrete plans need to take shape, Imber Wealth Advisors helps make it happen. Give us a call today and be sure you’re on the right path for comfortable retirement they way you want it.