Tag Archives: retirement

Retirement 101: Will I Ever Be Able to Retire?

Most of the people today are busy spending more time contemplating about the future hobbies, adventures, and travels that they would do during retirement. This is also the reason why they are saving and investing as early as today to support the lifestyle that they are envisioning when they already decided to stop working.

However, there is one question that remains in their minds, “Will I ever be able to retire?”. Even though they already have a vision of what is waiting for them in the future, there is still this hint of uncertainty. This is normal. Of course, we can never be so sure of the future, right? Read on and find the answer to your question about retirement.

While 2/3 of people are now investing and saving for their retirement, 15% of them are planning on winning the lottery and 1% of them expect that they would be money-gifted. There are really many factors that intervene when it comes to retirement. But there are ways for you to be sure if you will really be able to retire. Here are some:

  • Know Your Expenses – Knowing your expenses is very critical for your retirement. If you have not been tracking your expenses, now is the best time for you to start your expense analysis. If you understand where your money goes, you can assess how much you will be needing for you to live in comfort during retirement. Do this by:
  • Plan for changes in your retirement expenses
  • Consider downsizing
  • Consider changes in healthcare cost
  • Understand Your Income Sources – Understand what is your income source when you are already retired. Are you depending on annuities, pensions, Social Security, distributions, or your own retirement savings? If you have savings, know if you can convert them into income stream or investment account.
  • Generate extra income
  • Take some risk
  • Do not forget inflation
  • Save More Often – Your savings play a big role in your retirement. It is actually the top consideration during retirement because it is the amount that you can surely use when you stop working. You can use your savings to invest in anything that you would like to do when you reach the age of 60 and up. If you are saving now, save more often. It would really be great help on your retirement.

The answer to the question “Will I ever be able to retire?” will always depend on how you work on it before the time comes. Retirement is not something that people should ignore. It is hard to work and earn money. You would no want your effort to come to waste in the end.

As early as now, do something to remove the uncertainty in you. The above mentioned are tips on how you can guarantee your retirement soon. Doing these tips will significantly determine your future lifestyle and status when you reach the age of your retirement.

Graphic: How Much Should You Have Saved Up for Retirement Today

Check out the handy table below from JP Morgan Asset Management’s 2014 “Guide to Retirement” that details how much should you have saved up for retirement today based on your current age.

How Much Should You Have Saved Up for Retirement Today

The chart details the amount of money a person must have in retirement funds saved to have sufficient funds to maintain their lifestyle after retirement. The chart clarifies that if people begin saving at a younger age for retirement the funds will grow greatly because of compounding interest. The chart is used with a intersection of both age, and yearly earnings.

Albert Einstein once called compounding interest the “8th wonder of the world”, and this chart demonstrates this maxim is true. The chart assumes a retirement age of 65, and allows for 7% growth in pre-retirement fund earnings, and 5% growth in earnings after the retirement age of 65. The chart assumes a annual contribution of 5% from the working person for their retirement. It also forecasts an average of thirty years retirement after the age of 65.

Old People’s Spending Habits Are Bad for the Economy

Because the United States is largely a consumer spending based economy, keeping an eye on spending habits is integral to the understanding and predicting future trends and economic growth. Economists need to know who buys what, how much they spend, and when in their life they spend their money. They cross reference this data with the demographic makeup of the country to get a better idea of which direction the economy is headed.

The Way Old People Spend Is Bad News for the Economy
via JP Morgan Asset Management

As you can see above that data shows that spending on all products and services tend to taper off after American’s forty-fifth birthday, housing and healthcare being the only two exceptions, which bodes poorly for everyone who isn’t a nurse or a real estate agent. With a large number of American baby-boomers headed into retirement, their reluctance to spend on common goods and services can act as a bit of a drag on a consumer based economy, but, on the other hand, adds certainty to the very important housing market and health care industries.

How Much You Need to Be Saving to Have $1,000,000 at Retirement

One of the realities of life is that you can not remain young forever. This is one of the major reasons why it is good to save for retirement. However, saving for retirement could be a very tough decision but gut is needed here to make it successful. So, if you have made up your mind to retire a millionaire before clocking fifty.

via Business Insider

Just take the bull by the horn and follow this expert advice: – Ensure you start your savings very early – Set aside some amount from your monthly savings as a starting point – Ensure you are saving close $700 a month in order to become a millionaire before you a fifty years starting from 20 years. – Let your savings match the return rate as shown in the charts

Graphic: How Much Should You Have Saved Up for Retirement Today

The table shown in the image is a savings calculator tool. The table aims to be a guideline to help savers understand how much money they should have saved in preparation for retirement if they have been saving about five percent of their salary.

How Much Should You Have Saved Up for Retirement Today

The table is broken into two categories; on the y axis is the age category, beginning at thirty years and ending at sixty five years, with five years intervals in between; on the x axis is salary, starting at fifty thousand dollars and ending at four hundred thousand dollars.

To use the table a person must first find the number closest to their age on the y axis and then the number which closest approximates their salary on the x axis. At the intersection of these numbers will be another number, which, when multiplied by the salary, will indicate the amount of money a person should have saved.