Longer life means that we spend most of it in retirement. If we assume that we are finishing work at the age of 60-65 (depending on legal regulations), we are already talking about a good dozen years spent in retirement! And maybe twenty. What does it mean? How much I need to retire?
Why should you think about it now
It seems that it is time to redefine the stage of life that we spend actively. If we start work at the age of 20-25, finish at the age of 60-65, and then spend the next 20 years in retirement, then the employment period is only twice as long as “the longest vacation of a lifetime”, i.e. retirement.
Rather, we cannot count on the state to finance this vacation. Most of us after the end of our professional career will receive a micro retirement allowing at most vegetation. It will not be more than 30-40 percent. standard pay from working time.
How much capital you need
How do you calculate how much capital you need to raise for retirement? Well, on the one hand, you don’t need a lot of money for “the longest vacation of a lifetime” because: a) there are no more dependent children, b) loans, with particular emphasis on those mortgages, are usually repaid, c) entertainment needs are smaller.
On the other hand: a) we spend more and more on health (access to private doctors would be useful), b) we have more time to travel and explore the world, c) the possibilities arising from the use of new technologies are increasing from decade to decade, it is worth having money, to use it.
Americans estimate that in retirement, you need to accumulate money equivalent to 80 percent. average earnings from the time you worked. Such money will allow us to spend those 20 years comfortably, in which we have the most free time and the most ideas for realizing dreams that we did not have time to realize, because … we worked and took care of children.
Let’s assume that the base portion of the monthly cost of living during retirement is 80 percent. average salary, which in times of professional activity gave us the status of “young gods”, that is, people who have money for all basic needs plus some more pleasure.
If you earn $ 4,000 today net monthly, that means you have an annual income of $ 50,000. 80% this amount is $ 40,000 If you retire at the age of 65 (even if the government allows you to leave earlier, there is no compulsion) and the average life expectancy is 78, then you will need about $ 500,000 in retirement. zł. That much results from the multiplication of 80 percent. average income from working time over the estimated number of years you retired.
What else is there to remember when it comes to private retirement
Savings contributions for private retirement need to be adjusted every year for inflation, so that it does not turn out that in 30 years we have – yes – as much savings as we assumed, but only in nominal terms, because their real value is, for example, half as much.