How much money do you need to retire? The question you should really be asking is, “how do you want to live?” A seven-figure retirement isn’t applicable to everyone. You have to consider how much fun stuff you want to do and the luxuries you want to have. Here’s what to consider when it comes to calculating your retirement savings goals.
The Lap Of Luxury Or Tiny Home
You want to enjoy your golden years, not just live them. You may have heard that you’ll need the equivalent of two-thirds of your annual income per year of retirement. Does this take into account how much fun you want to have? Travel? Passion projects? The classes you want to take?
You may find that you’re the happiest downsizing and enjoy staying put. In that case, going miniature with a tiny home could save you quite a bit of money. Paint a clear picture about what a happy retirement looks like. You’re not the average retiree. You’re you. Your savings should reflect that.
How Are You Growing Your Money?
Money can grow fast, and it can grow slowly. It all depends on how you invest. Most retirees opt for lower-risk portfolios. High-risk investments are for the young-guns with plenty of years left to recover when the market crashes.
Even low-risk investment portfolios are at the mercy of a floundering economy. The projected earnings of your one million dollar portfolio can quickly shrink. When it does, you’ll wish you had a little extra cushion.
You Will Get Sick
With age comes higher rates of illness. Medical bills are a bigger threat to your budget than tanking investments. Expect the unexpected. The tail-end of retirement may be a lot more expensive than the earlier years.
How long do you plan on living? Don’t forget this critical tidbit. The last thing you want is to run out of fun money while you still have your health. Maybe that number is above one million dollars, and perhaps it’s below. Figure out what makes you happy and tailor your savings goals appropriately.