Are you set up for a comfortable retirement? If you have carefully planned for your retirement and have everything in place for the day you retire, that is excellent news. However, most people have procrastinated planning their retirement, considering it too complicated or time-consuming to take on at any given moment. However, ignoring the issue will not make it go away. Retirement planning starts with a simple step: determining how much money you will need to save for your retirement.
Calculating Your Retirement Savings Goal
While there is more to retirement planning than just money, it is safe to say that without adequate retirement savings, retirement will not be enjoyable. Putting enough money away for those golden years does require planning, but it is not as complicated as you may think. Here is a basic way to calculate how much you should save for your retirement:
- Determine how much money you and your spouse spend per year (or intend to spend when retired).
- Calculate how much income you will receive from Social Security and pensions.
- Subtract the total income from the amount you plan to spend.
- Multiply the difference by 25. This is assuming you will be retired for 25 years and will give you a ballpark figure.
You can calculate this number quickly and have a base point to begin planning your retirement. If your goal amount is $800,000, you can begin to look at options to achieve your goal. Will you sell your home when you retire? How much equity can you expect to have in your home? How much do you have now in your retirement accounts? You should also consider the tax implications of different types of IRAs and savings options. While it may not be simple to plan for every aspect of your retirement, once you start with an estimated monetary goal, it makes it easier to begin planning your options to achieve that figure.
Part of retirement planning is understanding how taxes will impact your savings plan. Contact our team at MMKR to learn about the best strategies for your situation to reduce tax liability, both now and in retirement.