How much should I save for retirement per month? If you’re struggling to answer this question, you’re not alone. Retirement savings are a topic of much worry for most people, but setting up a retirement savings plan will help minimize those worries.
Calculate retirement expenses
Using our Cubux budgeting app will help you greatly with this step since you will already have an accurate account of how much you spend on what every month. Simply average your expenses for each spending category and fill out a spreadsheet with this information. Then create another column and fill it out with what you think you will be spending on the same things during your retirement. Taking inflation into account is a great way to start. In addition, you may start spending more on travel and hobbies, while some expenses, such as mortgage payments, will disappear completely. Add up the numbers in the second column to get your approximate spending per month when you retire, multiply this sum by 12 to get yearly retirement expenses.
Double check your retirement plan
Another way to calculate how much money you will need is to assume that you will be spending about 80% of what you will be making in the last decade before your retirement. Compare this to the sum you’ve calculated using the first method – they shouldn’t differ drastically. Once you have your estimated yearly expenses things get a bit trickier since you can’t know how long you will live. The best advice is to use the average lifespan in your area, although keep in mind that as medicine advances, this number will probably keep gradually increasing. You should also take into account your family history just in case people in your family usually live much longer than the average.
Try using a retirement calculator
Good calculators account for inflation, average life duration, economy changes and more to help you understand how much to save for retirement by age, how well you’re doing with your retirement savings account and how much you will be able to save by the time you retire.
There are also many reliable retirement guides and retirement investment strategies to help you through the process. After all, you don’t want to just have your money sit in your savings account, you want to multiply it as much as possible. At the same time, making a risky investment can cost you a large chuck of your retirement savings. So always remember to diversify your package and even get professional advice for your investments.
