Posts Tagged ‘retire at 55’
Retire at 55? How much do I need to retire?
Retire at 55. That is what some of us are thinking of. Though most financial advisers often recommend at least 15% savings from one’s monthly income to have enough for the retirement age but the fact is that even 15% of your monthly income may not be enough for you to pay your bills. Aside this many organizations are finding it difficult to pay their retired staffs . It has also been discovered that less than 20% of those who work outside government establishments receive entitlements after retirement.
Depending on your age and economic situation around you, you will need different investment plans to ensure that you make it big before retiring at age 55. It has been suggested that the amount of pre-retirement income you should aim to replace when you leave your job should be around 80% of the total income you have earned or at least $1 million.
Depending on your age, medical history, dependent family size and several other factors you may have to start saving very early before the age 55 to retire comfortably. Researchers have shown that those who start saving at an early stage of their working years will find it more comfortable to retire at the age of 55. No amount is too much or too little to invest. An investment of around $10,000 for 25 years may grow to more than one million dollars or more if followed strictly.
According to researches. A 32 year old may have to save up to $14,000 yearly to be able to have around $2 million at the age of retirement. You may also need to save $10,000 a year outside of your retirement account to be able to have some financial stability while saving for the retirement age of 55. It will be hard to save this kind of money no doubt considering the fact that you will need to pay insurance and settle all other debts and perhaps what you often have remaining is few Hundreds of dollars. The best possible way to save money while earning low income is to set your priorities and make away with some non essential spending.
Most retirees will also receive Social Security benefits that could replace another 20% or 30% of pre-retirement income. For the average wage earner – with an income of $37,000 in 2005 –Social Security replaces about 42% of pre-retirement income; the figure is less for those with higher earnings. That would boost total income close to the 75% to 85% range of pre-retirement earnings generally recommended.
Saving around 15% of your monthly income does not mean you should stress yourself on your salary. There are some part-time jobs you can take to generate some savings. It has been discovered that those who have more than 1 jobs save more for their retirement age. Get some online jobs which will not take much of your time and remember that It doesn’t make sense to stash all of your money in an immediate annuity -especially one that does not increase with inflation because you will wipe out your savings. You can put around 65-70% of your savings in annuity depending on how well you can cope with the financial demands you got. So go ahead and start effecting your plan to retire at 55.
