Retirement is not a “one size fits all” type of scenario. Some financial advisors will say you should save 60% to 80% of what you earned before you left the workforce, but even this blanket statement doesn’t really give a good indication of what your goal should be, and more importantly, how you plan to get there.
When it comes to retirement, there are many factors to consider:
Will you still be paying a mortgage or rent?
What are your basic living costs per month? (food, car, insurance, cable, phone, etc.)
If owning your home, what do you need to pay in property taxes every year?
How often do you want to travel?
What do you have in savings or emergency funds?
What retirement benefits will be available to you through personal savings, pension plans, CPP and old age security (OAS)?
The first step should be to make a budget based on what you will be spending in your retirement years, keeping in mind that certain things like clothes may be considerably less when you’re not working. If you aren’t sure where to start on this, simply visit our website at https://gobelmont.ca/Services/Personal-Savings-Insurance and click on “budgeting tool”.
Once you have the monthly budget figured out, multiply it by 12 (for one year), and this will give you the desired yearly retirement income. You can take this total to our website, and click https://gobelmont.ca/Services/Personal-Savings-Insurance and select “Retirement Savings Calculator”. This will help give you an idea of how much you should be saving. Don’t forget you have to pay income taxes too!
Other factors will affect this, such as pensions and old age security payments, as well as any investments. For instance, many people who own their house make the decision to sell it, and downsize, using that money as a nest egg to tuck away and help live on.
As far as how long to estimate you’ll be in retirement, this is a very difficult thing to do. Factors such as health and age of retirement have a large impact. As a general guideline, the U.S. Census Bureau reported that for 2018, the average number of years that people were in retirement was 18 years.
Nothing can replace the advice of a trained financial advisor. Your best option is to schedule a consult with someone, who can go over your specific situation and make recommendations tailored just for you. Call Belmont Health & Wealth today, and get started on making plans for your future!
Image by Nathan Wright from Pixabay