Salary is 130,000 retire at 60/65
1. Calculate how much you would reasonably like to have during retirement to meet your yearly financial needs. You can either estimate your living costs by utilizing a full budget sheet, or assume between 70% and 80% of your annual income at retirement, a. To see the type of income you can expect to have later in your career, use a site such as payscale.com or salary.com. 2. Next, determine your desired retirement date (how many years until you retire). 3. Now calculate (using 3% inflation) how much you will need in future dollars each year to be the equivalent of today's dollars. a. You are only calculating the amount needed for the first year of retirement in today's dollars. This simplified estimate assumes no inflation during retirement, so it is only an estimate. 4. Next, check out the Poodwaddle Life Clock (http://www. poodwaddle.com/life/) or some other life clock to estimate how long you will live. Enter the difference between your life expectancy and your age at retirement to determine the number of years you will live during retirement. (This is how long your money will need to last.) 5. Next, calculate how much you will need to have in your retirement account at retirement. Assume that you will invest conservatively during retirement and will only earn a 5% return. 6. Next, determine how much you will need to save each month between now and your retirement goal date to reach that amount. a. Try using three different rates of return for your investments, of 5%,8%, and 10\%, to determine the amount you would need to invest each month. 7. Use the sample spreadsheet downloadable below to record your numbers. 1. Calculate how much you would reasonably like to have during retirement to meet your yearly financial needs. You can either estimate your living costs by utilizing a full budget sheet, or assume between 70% and 80% of your annual income at retirement, a. To see the type of income you can expect to have later in your career, use a site such as payscale.com or salary.com. 2. Next, determine your desired retirement date (how many years until you retire). 3. Now calculate (using 3% inflation) how much you will need in future dollars each year to be the equivalent of today's dollars. a. You are only calculating the amount needed for the first year of retirement in today's dollars. This simplified estimate assumes no inflation during retirement, so it is only an estimate. 4. Next, check out the Poodwaddle Life Clock (http://www. poodwaddle.com/life/) or some other life clock to estimate how long you will live. Enter the difference between your life expectancy and your age at retirement to determine the number of years you will live during retirement. (This is how long your money will need to last.) 5. Next, calculate how much you will need to have in your retirement account at retirement. Assume that you will invest conservatively during retirement and will only earn a 5% return. 6. Next, determine how much you will need to save each month between now and your retirement goal date to reach that amount. a. Try using three different rates of return for your investments, of 5%,8%, and 10\%, to determine the amount you would need to invest each month. 7. Use the sample spreadsheet downloadable below to record your numbers
