Most of us don’t bother about our retirement planning in the early stages of our career. The anxiety, however, increases every year after 40 and we keep wondering where the money will be generated from, to meet the expenses after you quit your professional career.
Before you plan to seek professional retirement investment advice, it’s important to realize it’s never too late, and planning retirement is easy. There are actually numerous ways to save and invest money for living later years satisfactorily. You can start with assessing your needs and evaluating how much amount you need every year. You will need 10% more for emergencies. So, for instance, if your evaluation says you need around $80,000 in a year, make it $88,000 including emergency funds.
We humans can’t really predict how long we would live. However, most people plan to accumulate money for more than 20 years after retirement. So, the amount you will need to accumulate for retirement would be 20 times your yearly expense. In this case, it would be 20 x $80,000. Huge money, isn’t it? If you aren’t able to decide how many years of expense you would need, seek retirement investment advice from family, friends, professional experts, etc.
After you have a rough figure in your mind, it would be around $1,600,000 in your case. Now divide this figure with the number of the year left before retirement, which will give you a figure you will need to save every year. Say you have 40 years left for retirement, you will need to save 1,600,000/40 = $40,000 every year. Note: any existing retirement savings for the year must be subtracted from this amount.
This is, however, a simple calculation. If you want a more precise amount, you need to consider factors like tax and inflation, and the compound interest you will earn on the savings.
But saving around $40,000 per year is not an easy task. In fact, it’s extremely difficult except we think about other sources of income. Not even the best 401K plan will offer benefits enough to meet our requirements. You will definitely need a second income. If you are young enough and ready to take some risk there are many ways to earn a huge profit over your investment. For long-term, I would suggest you invest in real estate, gold, and good stocks. They have always proved to be a good investment if investment for long term.
If you consult an expert for retirement investment advice, he would probably give you similar advice. But isn’t it simple enough to do it yourself?