How much money will you need to retire?
If you are currently 40 years old, have an annual income of $75,000, and want to retire at the age of 67, you will need approximately $2 million in the bank. No problem, right? For nearly 60 percent of Americans who have saved less than $25,000, it’s a big problem. Huge! With current savings of $25,000 and ongoing savings of 10 percent of income, this individual would fall short by about $1.2 million.
Generally speaking, expect that you will need about 70 percent of your pre-retirement salary to live comfortably. This percentage will vary, depending on what you plan to do in retirement. Do you want to travel? Do you want to finally build your dream home? If so, you will likely need your entire pre-retirement salary or more. Also consider what your expenses will be and compare them to your expenses today. Will your house be paid off in the year 2040? Will you be paying for your own health insurance?
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