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Amount to Retire With
The question of 'how much money do I need to retire' is one that often gets asked but rarely gets answered. Obviously there are a number of factors that we need to consider when answering this question like
- How old are you going to be when you retire (will it be a late or early retirement)?
- What do you plan to do once you are retired eg. Are you going to travel the world or baby sit your grand children?
- Where to retire? Will it be in the suburbs or on the beach front property?
All of these questions need to be put into a retirement calculator in order for you to get an accurate answer to the question - how much do I need to retire?
RETIREMENT CALCULATOR
The first question you need to answer is - how much money would you like to live off per annum?
Let's use an average amount that would allow you to live a very happy and exciting lifestyle -
eg. $50,000
This amount will obviously differ from person to person, if you are planning on seeing every country in the world then I would imagine you would need a lot more money per year. Especially if you want to retire early!
Ok, so we are going to do our figures on the annual retirement income of $50,000
How much money would we need to save in order to earn $50,000 of passive income?
This depends on how you are going to be getting this income but lets assume that through property, the stock market and some cash investments you can get a return of 7%. At the moment this may sound like an unrealistic amount but if you average this number out over time then I believe this is extremely possible. In fact I would say this is a very conservative estimate, especially if you have some financial knowledge.
So if you were to have $715,000 worth of ungeared investments eg. Shares or property that was earning you 7% per annum you would be able to draw an annual income of $50,050. By doing this you wouldn't even be touching your savings. Let's get onto your own retirement planning
So how do you figure out how much you need to retire?
Simply work out the amount you want to earn per year. Let's call it X
Then divide X by 7 and times that number by 100
This sum will give you the amount of savings or paid off investments that you will need to be able to retire happily.
So is your number more or less than you thought? You may also like to consider that by using this retirement calculator means that you will never spend your initial capital. If you take this into account you may need slightly less than the figure you get. Now that we have answered how much money do you need to retire, it's time for you to start thinking about how to save that money.
- How old are you going to be when you retire (will it be a late or early retirement)?
- What do you plan to do once you are retired eg. Are you going to travel the world or baby sit your grand children?
- Where to retire? Will it be in the suburbs or on the beach front property?
All of these questions need to be put into a retirement calculator in order for you to get an accurate answer to the question - how much do I need to retire?
RETIREMENT CALCULATOR
The first question you need to answer is - how much money would you like to live off per annum?
Let's use an average amount that would allow you to live a very happy and exciting lifestyle -
eg. $50,000
This amount will obviously differ from person to person, if you are planning on seeing every country in the world then I would imagine you would need a lot more money per year. Especially if you want to retire early!
Ok, so we are going to do our figures on the annual retirement income of $50,000
How much money would we need to save in order to earn $50,000 of passive income?
This depends on how you are going to be getting this income but lets assume that through property, the stock market and some cash investments you can get a return of 7%. At the moment this may sound like an unrealistic amount but if you average this number out over time then I believe this is extremely possible. In fact I would say this is a very conservative estimate, especially if you have some financial knowledge.
So if you were to have $715,000 worth of ungeared investments eg. Shares or property that was earning you 7% per annum you would be able to draw an annual income of $50,050. By doing this you wouldn't even be touching your savings. Let's get onto your own retirement planning
So how do you figure out how much you need to retire?
Simply work out the amount you want to earn per year. Let's call it X
Then divide X by 7 and times that number by 100
This sum will give you the amount of savings or paid off investments that you will need to be able to retire happily.
So is your number more or less than you thought? You may also like to consider that by using this retirement calculator means that you will never spend your initial capital. If you take this into account you may need slightly less than the figure you get. Now that we have answered how much money do you need to retire, it's time for you to start thinking about how to save that money.
Plan your Retirement now!
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