How much do you need to retire?
Many people worries about retirement – The most frequently asked question should well be “how much should I really need?” Kiplinger’s Personal Finance Magazine has a intensive article which answer this question. The article gives several examples with some solid suggestion on how to save your retirement funds:
Young workers don’t need to get hung up on a specific target for their retirement nest egg. Save as much as you can as early as you can and you’ll be off to a great start. Although there is no hard-and-fast rule, Christine Fahlund, senior financial planner with T. Rowe Price, recommends that young workers try to save 15% of their gross salary (including employer matching contributions) in order to replace 50% or more of their salary in retirement (the later you start, the more you’ll need to save).
Most retirees will also receive Social Security benefits that could replace another 20% or 30% of pre-retirement income. For the average wage earner — with an income of $37,000 in 2005 — Social Security replaces about 42% of pre-retirement income; the figure is less for those with higher earnings. That would boost total income close to the 75% to 85% range of pre-retirement earnings generally recommended…
How much do you need to retire? – [Money Central]
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Comments
Michael says on February 18th, 2006 at 12:14 am
Actually asking “How much do I need to retire” is the entirely wrong question.
Instead, ask “How do I become financially independant”
Basically – you become financially independant by creating passive income streams that make enough money to pay for all your expenses. Once you’ve reached financial independance – that’s then you can accumulate real wealth.
Aiming for a passive income that makes you financially independant is a much better option than working out how much to save for retirement, because you can continue to earn money past your death and that is real wealth that can be passed down to future generations of your family.