Most people know it is important to put money into retirement accounts. Many don’t know how much to save, or it may seem overwhelming to see how much is suggested to save for retirement. It is important to start saving for retirement as young as you can; this way you can have more years for your money to grow.
There are many websites and online resources with retirement need calculators and other information to determine your retirement needs.
The Social Security Administration has a variety of online calculators to assist you in determining your retirement needs. There are various calculators depending on what you want to do. None of the calculators are linked to your Social Security earning record. You enter current earnings information and what your expectations for retirement are.
Under current laws, Social Security benefits are to replace 40 percent of your pre-retirement earnings. You need retirement savings to make up the difference because in many cases your expenses will not decrease greatly in retirement. By the time you are retired, you will likely have your home mortgage paid off but may have increased expenses such as health expenses and want to travel more.
The Calculator Site has a variety of calculators which also includes one to determine your retirement needs. Some of the other calculators on the site are mortgage loan, car payment and credit card repayment calculators.
To complete the calculator you enter your current income and the desired retirement income. The desired retirement income is entered as the percentage of your current income that you expect to require during retirement.
Some of the guidelines for determining which percentage to enter are:
Minimum as 50-60 percent of your current income achieves the government’s minimum level of financial adequacy. This is stipulated as half of your pre-retirement income.
Basic is 70-80 percent which takes into account if you have employer paid retiree health insurance. You will probably have minimal money available for luxury purchases.
Moderate is 80-90 percent will be required if you will have to pay your own Medicare/health insurance premiums and pay for insurance to cover costs above what Medicare pays.
Comfortable is 80-120 percent for a retirement lifestyle that is more luxurious than you currently have. Many people have dreams of traveling and other things they cannot do now when they are working. But many find that they may not afford to live they were hoping to when they retire. Many are having to continue working in some capacity once they officially retire to make ends meet. This may be because of unexpected medical expenses or other expenses.
Retirement planning is a very important, but many people don’t know how much they should be putting away for retirement. There are various online resources with calculators to help determine how much you should be saving for retirement when taking into consideration what your goals are when your retire.