While it might not always feel like the most pertinent task, saving for retirement is one of the most important things that a person can do with their money. Having an adequately padded retirement fund ensures that you are able to enjoy the later years of your life comfortably and happily without having to worry about burdening family members, living off of Social Security, or getting a part-time job to pay your bills.
For most younger, working professionals, retirement can seem too far in the future to consider—but by setting yourself up with milestone goals now, you can be sure you’re on track to have the post-work future you’ve always dreamed of. Today, we’ll be taking a look at how you can decide what your target retirement fund looks like and ways to break it down into more manageable goals.
Deciding How Much to Save for Retirement
While trying to decide how much money you will need for the rest of your life feels like a big task, it is important to determine a ballpark estimate for your future so you can set yourself up with adequate goals today. To understand how much money you need to save, you have to understand how much money you will need—even if it’s just the roughest estimation! The single most important question you can ask yourself is, “what do I want my life to look like once I leave the workforce?”
Getting an image of what your ideal retirement looks like will help you match your savings goals to your lifestyle goals. Will you be entering retirement debt-free? Would you like to downsize, travel, or purchase recreational entertainment? At what age do you plan to retire, and what is your target lifespan? Asking yourself these questions will give you a good indication of if you should target matching your current income or if you should plan to give yourself more to live on.
Creating Yearly Goals to Get You There
Once you decide a rough estimation of how much you will need for a comfortable retirement, it is time to consider how long you have to get there. The typical rule of thumb for retirement savings is that you want to put away 15% of your income each year, but depending on how long you have until retirement, what your current income looks like, and what types of accounts you are utilizing to save, this number can vary widely. Additionally, if you are a medical professional who had to complete a residency, you may have more catching up to do than someone who started contributing to their 401(k) as soon as they entered the workforce.
Fortunately, a qualified financial professional can help you determine exactly how much you need to save each year to be on target for your retirement goals and help you plan for you and your family’s future. If you have any questions, we’re always here to help!
If you’d like to get started on your retirement savings goals today, we are here to help! Contact us to set up a consultation and learn more about our services.