Deciding Whether Your Nest Egg is Big Enough
The first question you must ask yourself before you can come up with that number is: what do I plan to do with my retirement.
When calculating, it is also important to consider debt. Though you would likely prefer to completely pay off all your debt before retirement, the truth is that most people will not be able to. Whether it is a car payment, a house payment, or just credit cards, you will likely have some level of debt that you have to account for. You can either calculate based on a pay-off at retirement age or on continuing to pay your debt on a monthly basis even after your retire. The choice is obviously yours, but it will affect the amount you need to retire.
Keep life and health insurance in mind as well when setting your retirement number. If you do not plan correctly to account for insurance, you could end up burning whatever you do save on one major health issue. As you get older, health care will become more crucial, which means that the issue of both care and insurance is even more crucial in retirement than in youth.
Continue to calculate by adding in your regular cost of living expenses. No matter what age you are, you are going to pay utilities, you are going to pay various insurance costs, and you are going to pay for the upkeep of your home and possibly your vehicle. These are the expenses that are most often forgotten about when people put together a retirement budget, but can very quickly eat up your funds.
These few factors need to be considered when deciding how much you need to retire, and they really only touch the surface. Though health care, debt, and cost of daily living expenses are some of the most important issues when you figure out how much you need to retire, there are other factors that need to be taken into account. For instance, you also have to consider things like inflation and how long you have until retirement. So to an extent, how much you need to retire comfortably depends a lot on you as an individual. You can come up with the number yourself, but just remember to consider everything so that you can be successful in achieving your goal of a happy and low stress retirement.
By InvestorGuide Staff