It is a smart idea to begin planning for your retirement as soon as possible. At some point in your life, retirement will become inevitable and you will need resources to support your living out your golden years comfortably. You might be asking the exact amount you need for your retirement years. This is one of the best and important questions. A recommendation of saving 10% – 15% of your income annually to go towards retirement. However, situations and needs varies. Some steps you can take and things you need to consider when planning for your retirement. 

Consider the Future

Your future plans and what expenses you predict you will have determines the amount you need to save up for retirement. If you want to get a better perspective of this, try to lay out your expected spending. You can begin with your current expenses and determine if you plan on changing any of them. You should also check if you expect something to increase or decrease in cost. You can go further to listing anything you want to do in retirement after you have laid out the necessary expenditures. The list should make up of things such as traveling, big purchases and activities you would like to spend time doing. You should estimate the cost of all of them.

Once you have the information above, you’ll need to multiply it out based on when you plan on retiring and your life expectancy once you do so. Also, include anything you already have saved up. This step will give you a general idea of how much you can expect to need for living during retirement. Social Security benefits you’ve earned throughout your work history will assist with a monthly stipend; however, it isn’t typically a high number that you’ll receive. It’s better to plan for most of your retirement to not be based on how much you’ll receive in benefits.

Make Cuts

You may find that you will not be able to reasonably save enough to accommodate your current lifestyle and the things you would like to do while laying out your future retirement plan. It is important to run in to these things that you are looking at so as to be able to have realistic plans.

Determining if you need to make any changes to your retirement plan can be made easier by using a retirement calculator. Calculators offered on financial websites will use general and broad algorithms to accommodate most people, so you may find it misses the mark in some ways. But this is ok, as the calculators really should be used as a starting point on which to build.

Be sure to consider things that may disappear by the time you retire when you are looking at making cuts in anticipated spending. Some of these things include mortgages, car payments, student loans or other debts.

Save, Save, Save

Between 70% and (90% of your current income to live off, multiplied by how many years you plan to use your savings is recommended by financial planners generally. Depending on your current plans and your anticipated needs during retirement, this is a wide gap and can substantially change. 

It is also important to decide what amount you will feel comfortable living off during your retirement. You will need to make sure you are on track to save that much once you have the number. Because your final number is generally going to be large, even on the most conservative of budgets, it can feel daunting. It’s essential that you utilize all retirement tools available to you to maximize your savings as much as possible. Check in with your employer on any 401k benefits or pensions available. If you don’t have any retirement benefits available through work, you can open an independent retirement account (IRA), which has the advantage of offering certain tax breaks.