Now that you have set your financial goals, determined your net worth, made a personal budget, developed a savings plan and dealt with your debts – you are prepared for the unexpected. Now you need to prepare for the “expected”: retirement.
Below we provide a simple retirement savings calculator and planner to help you determine how much money you need to save for retirement as well as to advise you on how to accomplish the savings.
How do I calculate the retirement savings required?
Experts generally agree that you will need less to live on in retirement than you do today. Presumably, by the time you retire your house will be paid off, your children will be finished school, and you will not have any work related expenses.
Unless you plan to travel the world during retirement, you will probably not need any more than 75% of your current income to support your lifestyle in retirement.
A simple calculation our retirement savings calculator uses follows:
Take your average annual expenses and multiply the amount by 15 to get your required retirement nest egg.
For example, if you want to have $30,000 per year to spend in retirement, you need to save $450,000.
This calculation assumes that you will use your capital each year, and then die broke. If you want to leave some money to your children, you will obviously require a larger nest egg.
How do I save for retirement?
After you have used our retirement savings calculator to calculate the retirement savings required in your case, you will need to come up with a plan on how to save that kind of money. Saving for retirement is similar to your monthly savings plan. The only difference may be that you can utilize RRSPs to help lower your tax debts. Good luck!