Determining Your Retirement Savings Target
By: Emi Onuki
The notion of retiring sounds pretty awesome, having enough money in the bank that you can live out the remainder of your days without any concern for funds coming or going. Well, maybe a little concern. But to actually reach that point, you need to have enough money saved up that you can just live off your savings for multiple years on end. Depending on several important factors, that amount can vary wildly.
Firstly, consider where you live, or where you want to live. Do you want to retire in some quiet, cozy apartment in the city you grew up in, or do you want to spend your days lounging on a private beach. Obviously, the former is going to cost far less than the latter, which means you won’t need to save up nearly as much money. There’s also the question of paying off that living space. Even if you’ve paid off the mortgage on your home, there’s still things like homeowners insurance and general upkeep to stay on top of. You have to remember to factor those kinds of recurring costs into your calculations.
Next, consider what you do for a living, and how long you want to keep doing it. Staying in the workforce longer entitles you to greater social security benefits, but obviously, working a nine to five can become more difficult the older you get. You need to determine how long you’re willing to keep working your job, as well as when you’ll theoretically earn enough money from that work to retire. There’s a balance you need to strike.
Lastly, what do you want to do with your retirement? Some retir