Attaining financial independence takes planning and a lot of forethought when setting attainable goals so that by the time it's a few years to your retirement, you have your ducks in a row and ready to take the vacation world by storm. Setting retirement goals begins with determining how much you should start saving now to make retiring early possible.
With the average retirement age today of 63, your everyday American is not hitting the recommended superannuation savings benchmark. By the time you are 65 years old, you want to have 8-times your annual salary in your savings account. Simply put, you should apply the 50/30/20 rule which states that 50% of your salary should go toward paying monthly utilities, 30% variable costs and 20% is what you should save each month.
This should also include setting up a debt repayment plan and starting to pay off what you owe so that you have a solid financial footing come retirement.
The amount is not set in stone, and there certainly isn't a one-size-fits-all number. What you need is solely dependent on the lifestyle you envision when you retire. Again, if you are debt-free and your children are financially healthy, your goal should be to retire comfortably with a cash flow of 70-80% of your peak pre-retirement income.
If you have an Employer-Sponsored Pension Plan, take full advantage of the compounding interests and if possible, ask for an individual benefit statement so that you can see what it's worth. You may be leaving money on the table if you are not maximizing your 401k because you can save up to 19, 500 per year for your retirement, especially if your employer matches your contribution. The numbers are more forward-looking today and assuming you started saving $8,000 at age 22, including compounding, you could turn $827,000 to $6.6M dollar.
It's not uncommon for pensioners to spend an average of $4,300 or more on out-of-pocket healthcare costs in their golden years. Health insurance plays an integral part in preparing for retirement and because long-term care for retirees is far from free, you must consider your options now. When you turn 65 years old you are eligible for different types of Medicare coverage available depending on your specific healthcare needs.
Getting an early start to save for your golden years means that you can start leveraging compounding interests early. However, the jargon of it all can seem too overwhelming to comprehend on your own, and a certified financial professional can help you navigate the course of saving and planning for the future. A retirement advisor can help devise an attainable debt-eliminating strategy that will leave you free to maximize your tax-advantaged accounts and more.
So, points to remember;
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