The word retirement comes with the idea of vacations, beaches, enjoying your free time, taking up a hobby, and enjoying your grandkids. You worked your entire life for this point so you would have enough money to retire and enjoy yourself. But are you prepared? Did you save enough? How do you know how much you need to save?
Before you retire, you must figure out if you can retire on your current financials.
Rule #1
You will need about 65% of your pre-retirement income each year to keep your current lifestyle. That’s living your current lifestyle.
Rule #2
Be prepared for emergencies. You may have enough to cover your daily spending, but what about a big family emergency? Make sure you have enough to cover any emergencies that could arise.
Rule #3
Have enough for hobbies.
All of a sudden, your free time is consumed by a new passion. Something you maybe waited your whole life for. If you are getting ready for retirement and maybe this person, make sure you have enough for your new hobby and passion.
Rule #4
Do you have a side job?
You may retire but still enjoy work. If you work, you probably don’t need as much savings to hold you over.
Rule #5
Evaluate what you may have with social security, pensions, or other reliable income.
Rule #6
Are you going to downsize, pay off your mortgage, or buy a second home? Plan for these big moves in your lifestyle and make sure you have enough retirement savings to support this.
Rule #7
Plan for your family.
You may now have grandkids or extended family that you want to treat with fun gifts or getaways. Make sure you are able to spend that kind of money on your current retirement savings plan.
Rule #8
Don’t Panic about how much you have.
Realize you have about 25 great years left after you retire. You don’t need to plan for an entire life of savings in just a few decades. Save what you can, enjoy your retirement, and enjoy your life as you get into your older age.
