There is a golden rule that you should budget a certain percentage of their income in retirement says. Many experts say that sets you apart from 10 to 15 percent of their income adjusted for their golden years.
But it is a theory of competition, should you budget for retirement based on the lifestyle you plan, no income you are currently earning, enjoy.
To illustrate this idea, represent four possible pairs.
Adam and Alison are retired. None of them generate income. You will receive money from their pensions, their 401 (k) withdrawals and Social Security. Their houses and cars are fully paid and are debt free. You just live. Most nights we eat dinner at home and take advantage of low-cost activities such as gardening, knitting, playing with his grandchildren and the dog for a walk.
Bob and Barb are also eliminated. None of them generate income, and to get as Adam and Alison the money from their pensions and 401 (k). Their houses and cars are also reimbursed and are debt free. However, living in great retirement. You eat dinner at the restaurant. You like sailing, golf and tennis. You own a second home near the beach, and traveling abroad.
Carl and Cathy retired from his day job, but two of them still work. They did not have the income - they have enough money to live comfortably on the basis of its economy - but they want to work. It gives them satisfaction and purpose, and if they do not work, they tend to be bored and depressed. Carl is going to write a novel while Cathy has an online business. Receive additional income from your job, supplement their retirement, but are so busy working - to enjoy - not to spend the time. Take more money than they know how to use.
Derek and Debbie set up passive income streams when they were younger. Now home rental income, royalties, dividends and interest has enough to comfortably retire. However, retirement is responsible for the management of these sources of income. They are often conducted by teams of accountants, property managers and repair hands to keep their investments afloat.
What is the common feature of these four stories? Ideal Retirement everyone is different.
Some people are content to live a simple, quiet life. Some want to enjoy travel in the world, expensive hobby, enjoy good wine, renovate your house and try new activities.
Some people are forced to work because they can not afford to pay their bills, but others choose to work for the joy and satisfaction, even if they have an income.
Traditional formula prescribed pension advice: save 10 percent or 12 percent or 15 percent of current income for retirement.
But this rule is general advice not take into account the type of retirement you hope to have. Adam and Alison are pleased to live simply. You are cooking with your own meals, your own house clean and happy playing with his grandchildren.
If you live as a couple, you do not necessarily need to budget 15 percent of their after-tax income in retirement, unless you start later in life saving, to want to leave a legacy to their children, or wish that a solid plug in an emergency.
A partner like Bob and Barb, on the other hand want to play the excitement of the trip to Italy, Golf, take art classes and travel to a seaside villa. If you want to live like this you can pair up to budget for more than 15 percent have retired.
And if passive income streams, as Derek and Debbie is configured, you may not need the maximum contribution 401k per year.
What is another golden rule?
Calculate how much you want to spend a year in retirement. Multiply that by 25, which is the amount that should have saved in your retirement account.
In other words, from your savings goal for retirement costs, not your income.
(Why multiplied by 25? Read the explanation.)
Remember: this is only a general rule. Personal Finance is - well - the staff and the amount needed in retirement will depend on a number of factors, including your debt ratio, your family, your health, your life expectancy, tax obligations, needs safely, and other considerations.
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