According to retirement specialists, it is advisable to have saved an amount equivalent to 10 times the salary that was received before retirementand plan to live on 80% of the annual income that was obtained before retirement.
That means if you make $100,000 a year when you retire, you need at least $80,000 a year to have a comfortable lifestyle after you leave your job, Investopedia reported.
On the other hand, suppose you managed to save $1 million by age 60, this money could last you for 25 years if you spend only 4% of that million each year. This means that you would have to survive on a budget of $40,000 per year.
If you have investments, social security, and live in an economic zone, you could have a good quality of life on $40,000 a year.
This 4% rule can be applied to any amount you save.
Take into account that there is no fixed number to know how much a person should have saved, since it all depends on your lifestyle, health, and how much money you feel comfortable living with, after you no longer work.
According to the findings of a Northwestern Mutual study, American adults said they feel they need at least $1.25 million to maintain a comfortable retirement.
Although it may seem daunting to reach that amount of savings, there are strategies to start working on them before the age of 60, which will reduce the possibility of not having enough money at retirement.
It is recommended that you make saving a habit and start saving 15% of your income. If you can’t afford this, then you can start with any percentage.
If you don’t have a 401(k), you can invest in stocks. Investing can generate lucrative returns, but you should always make sure that it is a very safe option, so you should do a very good research.
You can also talk to a financial professional to give you different investment options. Just remember that it’s crucial that you understand where your money is going to go.
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