When you were a kid, a million dollars probably sounded like an impossibly huge amount of money. Now that you’re grown up, you know that a million dollars isn’t an unrealistic amount when you’re thinking about funding your retirement.
What’s more, even an amount of money that sounds like a lot now might not be by the time you reach retirement age. When you factor in inflation, you’ll need even more than you think you will.
It’s easy to underestimate how much money you’ll really need for retirement. Here are a few things to consider:
- When you retire, chances are you won’t want to change your standard of living. If anything, you may want to live a little better than you do now. Going out to dinner, taking vacations, splurging on your friends and family–plan for all of these things, not just your mortgage and basic expenses.
- With advances in modern medicine, individuals are living longer than ever. Assume you’ll live until you’re 90, at the very least. If you retire at 70, you’ll still need income for a minimum of 20 years.
- Medical care that can help us stay healthy well into old age is not cheap. In addition to having enough money to keep up with bills and fund the lifestyle you want, remember to have plenty of extra to cover health care.
- If you have children, you’ll want to be in a position not only to help them out financially, but to let them enjoy their own lives. Sure, they’ve asked you for money countless times–but do you really want to have to ask them someday? Having your own source of retirement income frees your loved ones from worrying about your retirement financial situation.
Your Retirement Reality Tip
Most Americans want to stay in their own homes as they age. If you’re one of them, your retirement income plan may need to include funds for necessary remodeling, like hand-bars, ramps, or wider doorways.
Give some thought to what’s important to you. Maybe you don’t want to settle for having enough to live—you want to live it up! Or perhaps supporting your spouse, children, or other relatives is your first priority. How much money you’ll need for retirement is very individual. There’s no one-size-fits all answer.
Imagine how good it would feel to relax and enjoy the rest of your life without worrying about money. Whether you’re working with a licensed professional or planning on your own, make sure you have a realistic idea of how much money you may need to fund your future. Like time, money flies when you’re having fun. You want to have more than you think you’ll need—not less.
To find out where you currently stand, fill out the Are Your Current Savings Sufficient?assessment.