One of the questions we often ask ourselves, is how much money we think we will need to save for our retirement? The simple answer is that it will not be the same for everyone, there are so many factors to consider such as what age you want to retire, how long you live, and the lifestyle you plan to lead.

Think about the lifestyle you want to lead

In retirement, we finally have the freedom to choose how to spend our time. While some people want to simply spend more time with family and friends, others are ready to travel, join a country club, take up a new hobby, or dine out in expensive restaurants. The lifestyle you want to lead will ultimately depend on the savings you have.

Plan to save between 10 – 15% of your annual income

If your annual gross income before taxes and other payroll deductions, for example, is $100,000, your goal should be to save between $10,000 and $15,000 each year before your retirement. Some employers will match the contributions you make, and this helps reduce the amount that you will have to save yourself.

What other contributions will you receive other than your savings?

Social security

Almost all retirees in the US who stop working at retirement age receive Social Security benefits. It is a federally funded program. Benefits are provided to eligible people by utilizing the trust funds created by taxes.

Pension Plans

Besides the funds you will receive from social security, do you have a pension plan at work or a personal pension? Contributions and investments for retirement are allowed under defined-contribution plans, whereas defined-benefit plans provide a specified payment amount at retirement. This determines whether the employee or employer is responsible for investment risk.

Reverse Mortgage

Folks who are 62-years-old and older can apply for a reverse mortgage. Homeowners can convert the equity in their homes into cash income without having to pay monthly mortgage payments.

Keep track of your retirement fund

It is important to keep track of your progress so that you can meet your long-term retirement savings goals. As previously mentioned, the amount of money needed to retire will differ from person to person. There are Personal retirement planners who can help you to determine how much money you should save for retirement and evaluate if you’re on the right track.