What is the amount of money needed for you to retire comfortably? Have you thought about it? Have you determined what you will need? Is $1,000,000 enough? $5,000,000? What will it take? Well, let’s take a look at some of the things to consider.
Have you set an age that you want to retire by? 40? 50? 65? The age you have selected, do you have enough to live on for another 40 years? 50? 60? How far away from your desired retirement age are you? 10 years? 20? 30? We haven’t even discussed how much you want to have when you retire, and here we are, already looking at 3 variables that need to be resolved. When you have the answer to those 3 variables that will be a good first step. Granted, the one variable of how long we plan to live, is not completely in our control, but we can get an estimate based on trends in our country. Female life expectancy is 81.6 years. Male life expectancy is 76.9 years. How far away are you from the average?
Are you married or single? Do you have any kids, and if so, how many? If you have kids, do you plan on helping them pay for college? How much? The 2015-2016 school year average for college is about $9,500 for public schools, $32,000 for private school. So a basic 4 year degree will cost anywhere from $38,000 to $128,000, not taking into account inflation over those 4 years, or even when those 4 years start.
Do you own your house? Or are you still making payments on it? Have you figured out how much you have left on your house? Do you want to have it paid off before retirement or will you continue to pay for it in retirement?
There are a lot of questions to answer, and a lot of planning to take care of. The more that you have accounted for, the better off you will be, when the unexpected moments in life come up, which they always will. By the end of these exercises, you should have an idea of what you need for retirement and a game plan to get there.