Whether retirement is near or if it’s far, one can always count on it becoming present one day. In the span of a lifetime, through one’s career, it becomes apparent that all things must come to an end. It is wise to know that there will come a time when one will desire to retire from work. One must save up for the inevitable occurrence and it’s important to start today. Here’s how it works: pick a number for a yearly income to live on. A range might be $12,000 to one million. Look at the cost of living and project to how much it will cost in the future. Rent, food, car, insurance, medical bills, all need to be factored in. Next, decide when one wants to retire, it can be when one is 65 years old or sooner or later. Another way this can be done is by taking the current yearly income that one lives at now and calculate how much one needs to retire.
Calculate the necessary cost of living which includes all of the things listed above and multiply it to how many years one will expect to live after retirement. Some desire to live until 100 years old. So this is what it looks like: retire at 65 years old and live until 100 years old. (100-65=35 years). That’s 35 years that one needs to live for with all of their expenses. If one wants to live on one million dollars a year, they need to save 35 million dollars by the time they retire at 65 years old.
Now, take one’s current age (30 years old) and calculate how much one needs to save each year until they retire at 65 years old. (65-30=35 years). At the age of 30 it will take 35 years to retire. One must save one million a year in a retirement fund every year. One must remember that they need to pay for their living expense while they save for retirement. Also, think about how much one desires to give each year too even into retirement.
But don’t be a dog with his head cut off.