Calculating how much to save for retirement can be made easy with the use of two popular methods. A simple way is called the rule of thumb while another more complicated method involves measurements based on detailed expenses.
The rule of thumb is simple. Simply divide your age by half. The quotient will represent the percentage of your income which will be allotted for retirement plans. For an example, if you are 30 years old, you can spare about 15% of your income for savings necessary in preparation for your retirement.
This method is less than perfect though as there are other factors to consider such as how many years will you stay retired, the type of lifestyle you will have during retirement age, and other issues such as possible dependents, mortgage, and the like.
Nonetheless, spending money in preparation for old Age calculator age as early as possible as a part of your retirement strategies is wise. You can begin paying for a retirement plan such as the Roth IRA and the Roth 401k. Other pension plans from private companies are also offered based on your budget and needs.
Both Roth IRA and the Roth 401k are government based pension plans. The Roth 401k is traditionally required. For the Roth 401k, an individual employee is debited a specific amount from monthly earnings which is in turn invested upon the plan for retirement age. Roth IRA on the other hand differs from the traditional one in a few ways.
It is not required and can be chosen as an elective option only. When funds are needed, it can also be withdrawn at any time.
Aside from saving for retirement or pension plans, other expenses which need to be included on how much to save for retirement include social security and health insurance. Saving financially through banks and financial institutions will also help cover up unexpected expenditures once you do retire.
Investing for retirement is also a good idea. Since there is no accurate way to calculate how much exactly is going to be needed, investments will provide additional income when you retire. Some investments which you may want to consider include real estate properties, stocks, and bonds.
Gold related investments such as mutual funds, exchange traded funds, bullion of bars and coins are also becoming popular nowadays. This is due to the capacity of gold to withstand the effects of inflation.
Detailed calculation based on current expenses as mentioned earlier is one of the two ways you can use to find out calculate retirement savings needed. The other method called rule of thumb was already discussed.
To know how much to save for retirement, consider factors such as your current age, the age you plan to retire and the estimate of how long will you be retired, your overall income including possible salary increases, the percentage you will allot for retirement contributions and the percentage of potential earnings when you retire, retirement savings you have or are still paying for, expected investment returns before and during retirement, and inflation.
Aaron Kutchinsky is a writer, lecturer, and committed financial activist.
In 2010 Aaron created and founded Guardian Gold & Silver as a definitive and groundbreaking alternative to the gold industry norm, a mission-oriented and revolutionary precious metals company with 3 specific goals in mind:
• Do the right thing.
• Lead others to understanding.
• Get as many into the boat as possible.