How do you know if you are on track toward having enough money saved for retirement? This is a very difficult question but necessary to review, though it’s impossible to have a firm answer because we can’t possibly know how much inflation will have increased daily living expenses. While a specific dollar amount may be impossible, you can still get a good idea of how much you may need and if you’re on the right track.
Many financial institutions have great retirement calculators available to determine if you are on track. For example, I like RetireMyWay (link to http://www.retiremyway.com/) by Capital One 360. This calculator tool allows you to choose the lifestyle you wish to lead during retirement and prepare an estimated budget based on that lifestyle. You can also manipulate the numbers to reflect whether you’ve paid off your house, wish to add travel to your lifestyle, and any hobbies you may take on requiring funds. Further, this calculator allows you to input how you invest, how much you currently have saved and will continue to save, and the age for which you plan on retiring. The result shows you if you’re currently on target and/or if you need to raise your game by increasing your contributions. This is only one calculator offered but there are many others out there that may be of benefit to you so I suggest doing some research and trying others out too.
Using these calculators every so often is a great way to check-up on how you are doing and if you are on track toward having enough to retire on. I suggest not including Social Security because there is no way to know if it will even be an option when you are ready to retire. Plus, you want to make sure you keep financial responsibility in your own hands without relying on the government or anyone else; however, you can calculate both scenarios if you wish. I suggest playing around with these calculators using several different scenarios as you don’t know exactly what your retirement will look like but at least you have various options available to you.
Our next blog will be devoted to retirement options for contractors, the self-employed, and stay-at-home persons.
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