We spent many years working hard and saving money for the retirement. Our retirement can be a happy part of our lives if we save enough money. You should imagine yourself at 65 years, and estimate how much money you need for the retirement.
Before getting into details I’m sharing some quotes on retirement that I found recently. I hope they will inspire you.
- “As in all successful ventures, the foundation of a good retirement is planning.” – Earl Nightingale
- “The question isn’t at what age I want to retire, it’s at what income.” – George Foreman
- “Retire from work, but not from life.” – M.K. Soni
- “Planning to retire? Before you do, find your hidden passion. Do the thing that you have always wanted to do.” – Catherine Pulsifer
- “Often when you think you’re at the end of something, you’re at the beginning of something else.” – Fred Rogers
- “Retirement is not the end of the road. It is the beginning of the open highway.” – Unknown
- “The trouble with retirement is that you never get a day off.” – Abe Lemons
- “Retirement is wonderful if you have two essentials — much to live on and much to live for.” – Unknown
How much should I put into retirement?
Generally, you need to save 10% to 15% of your income for the retirement. It is the best to start saving in your 20s. If you want to plan how much money to put into retirement, you need to know how much money you spend each month. How will you spend your money when you retire? Maybe you will travel or find some interesting hobbies.
You should count your potential monthly expenses for the retirement. Use a retirement calculator to see how your savings process works, how much money you need to accumulate and save. Don’t forget to calculate your retirement needs regularly. Life is unpredictable. Maybe you will find a new job or a new place for living.
Saving for retirement at 30
If you have 30, it is the right time to start saving money and make a plan for the future needs. According to researchers, if you start saving at 30, you need to save 12 % of your income for the retirement. If you can’t put 12% of your income now, you can slowly increase the money you save. Set up your savings goal and you will know how much money to set aside. You can invest in a tax-deferred retirement account – 401(k) plan.
Maybe you have debts (student loans, credit cards, etc.) you need to get rid of. It doesn’t have to be your priority. How much is the interest rate on your debt? If the interest rate is better for retirement investments, you should choose to save for retirement. Paying a debt with low-interest rate first is not a good idea. You should ask for raise of the salary. When you start earning more money, you can pay off your debts.
Automate your money using investment platforms (various money applications). Automating will help you save money.
Qualified retirement plan
A qualified retirement plan is created by one employer who wanted that the employees benefit from it. This plan meets the requirements of IRC Section 401 (a).
There are two types of this plan:
- defined benefit- pension plan in which employer or sponsor gives a payment based on your salary and years of working for the company
- defined contribution – 401(k) or 403(b) are defined contribution plans in which you decide how much money you will contribute and your employer will put that amount into your account.
Here are other qualified retirement plans:
- ESOP plans
- 403(b) plans
- 457 plans
How much will I have when I retire?
The most important step is to create your retirement plan. Use a retirement calculator to calculate how much money you will have for the retirement. Type data about savings:
- current age
- current savings balance
- annual savings amount
- annual savings increase.
Then type data about assumptions:
- age when income should start
- number of years to receive income
- before-tax return on savings (%)
- marginal tax bracket (%)
Don’t forget to save money regularly and check your savings process!
You need to start saving money for retirement as soon as possible, and retiring can be the best part of your life. When you retire, you won’t worry how to make money anymore. You will be happy, rich and relaxed.