So you’ve got a monthly budget and have already started saving for retirement, either through your company’s programs or your own. You’re well on your way to a comfortable post-career period, but just when is that going to be? If you’re like many people, you have only thought of that in the broadest terms, but part of the plan is setting the goal line. For help with that, financial planner Jeff Rose offers advice in his article, “
How to Calculate Your Retirement Savings and Retirement Date,” on the Equifax Finance Blog.
Following the estimation of your retirement budget and income, you will need to multiply your monthly retirement budget out to a yearly budget. From there, it’s a guessing game about how long you think you will live – and it can be a dangerous guessing game to under estimate and find yourself running out of money after being out of the job market for a long time. You will also need to account for increased health costs if you are retiring before you are eligible for Medicare.
Now that you have the goal, the total retirement amount, you just need to set the rate at which you’re going to reach that goal. A way to help this is for your money to grow in investments and savings until you reach or exceed the budget. There are a couple key factors to consider, including inflation and cost of living adjustments, which will modify your ideal amount of savings. Rose suggests planning for four percent inflation so that you are safe, and if inflation is not as high you will have an extra cushion.