Everyone wants to jump to that answer. After all, it's easier to budget when we have a specific number in mind. Unfortunately there’s no one number-fits-all answer for this. There are so many factors that come into play in figuring out your number: your age, savings rate, expected annual expenses, and more. Some calculators and experts focus on a percentage of your current income and others dig into expenses. You could go through dozens of calculators and get a huge range of numbers. The good news is, there are some questions you can answer that will give you a good ballpark for what to shoot for.
What Does Retirement Mean to You?
Sounds like a ridiculous question, but what you consider the perfect retirement may be a nightmare for your friend or co-worker. For some, they'd love to start a new career or volunteer more and not have to worry about the income it brings. Where do you want to live? Do you want to travel and explore the globe? Depending on what part of the country or world you pick, your costs of living can be drastically different. Take some time to write down what your ideal retirement plan is.
How Much Would I Need to Make My Dream Happen?
Now that you have a clearer idea of how you want to spend your money, you can research and see how much you need to achieve your retirement. While a million dollars is thrown out as a starting point, there are several people who've retired with less (including early retirees like Peter Adeney and Raleigh local Justin from Root of Good).
When Do I Want to Retire?
The last major piece of the puzzle is figuring out a timeline for when you want to retire. You may love your job and want to wait until your golden years to retire or you may want to retire much earlier and start exploring other options in your career and life. Either way, knowing when you need to retire can help motivate you to start or increase your contributions. If you haven't already and your job offers it, please consider contributing enough to your company's 401(k) to get a match. If you're looking to minimize costs and speed up your retirement date, it's a good investment to start simplifying and setting up your life now so you can contribute more for retirement. There are plenty of resources on and offline, where you can meet up with like-minded folks, encouraging you to stay focused and find more ways to invest for your retirement. You can also tap into local resources like Coastal's Wealth Management team (available through CUSO Financial Services, L.P.*) to walk you through the numbers.