Can anyone know for sure how much money they will need in order to live comfortably during their retirement years? To know exactly would probably require a time traveling sports car like the one in the movie ‘Back to the Future’. Since you cannot buy one of those at your local dealership some serious thought and planning need go into preparing for retirement.
If you are one of those do-it-yourselfers, there are many on-line retirement investment calculators available. Prudential has one that is fairly easy to use, which you can find at http://www3.prudential.com/SmartMoney/retirement/intro.html. You will need to know your basic financial information as well as the balance and interest rate your current investments are yielding. MSN money also has a calculator at http://moneycentral.msn.com/retire/planner.aspx
Many other financial institutions have calculators as well. If you choose to use an on-line calculator to guide you through your investments it would probably be wise to run your figures through more than one estimator.
If the on-line route isn’t for you, seek advice from an investment consultant that you know and trust. If you do not know any personally ask your friend, family, and co-workers who they would recommend. Find someone with experience and a good reputation. Once they have laid out an investment strategy for you go to another consultant and then compare the two plans. Just remember if something looks or sounds too good to be true, the investment probably are just that.
No matter how you come up with your savings goal there is one thing that everyone needs in order to save for retirement; that is discipline. Without discipline other expenses or luxuries will eat away at your retirement savings.
An excellent rule of thumb when trying to decide how much money to put aside for retirement is 8 to 10% of your income. Of course the higher the rate of return you are getting on your investments will mean less money coming out of you pay check each week. If your employer matches the money that you put into retirement by all means take advantage of that benefit. This can also reduce the amount of money you have to invest each week.
A good financial plan can never start too early. Most people do not realize that at a 5% yield money will double in only 14 years and triple in 22 years. What this means is; saving $2000.00 a year towards retirement when you are twenty is the same as saving $6000.00 a year when you are 42. And let’s face it most of us had far fewer bills before we got married and started a family than afterwards.
The easiest way to make sure that you save money for retirement is to have your employer do a payroll deduction. This way you never see the money, therefore you won’t be tempted to spend it. If your employer does not offer payroll deductions open a savings account at another bank and set up your on-line bill pay to send money to this account weekly or monthly. I know what you are thinking; why not just open a savings at your current bank. With the conveniences of on-line banking it is far too easy to transfer money from one account to another. Having the money at an entirely different bank will make getting to the money more difficult, thus keeping our nest egg safe.