How Much Should I Save For My Retirement?
The meaning of retirement varies from person to person. For some people, retirement means spending hours relaxing at a resort location and for others, it’s about living comfortably and spoiling their grandchildren. But, doing these things comes at a cost. Building the right amount of wealth for retirement takes time. This is why retirement planning is important. One should have enough savings to enjoy one’s retirement period.
Here, the question comes of how much to save. This is a very tricky question because the needs and expectations of every individual are different. No matter what, you cannot follow a standard formula for retirement planning. Doing this would result in either having too little money for retirement or maybe too much – at the cost of pre-retirement lifestyle.
What should one do?
One should consider a few factors to know how much to save for one’s retirement.
Know your retirement saving expenses
First and foremost, know the type of expenses you will have when you are retired. For example, some people have mortgage payments while some have other debts, such as credit cards or car loans. You should specifically know all of yours.
Other than this, you should consider the expenses towards your health, maintaining your home and the costs for everyday needs. These are likely to be the same as they are now. You should add all your expected expenses to these fixed expenses.
Understanding your expenses is important as this will help you know how much money you will need to have on each hand after retirement.
Know your retirement saving income
One should plan for several sources of passive income generation post retirement, supplemented by some active income generation, if needed or desired. For example, one can consider these sources of passive income, such as interest from investment accounts, pension, rental income from property investments and royalty/fees from businesses one owns.
Determining one’s retirement saving income will help one know how much more money one will need during retirement to lead a stable and happy life. When considering one’s income, one should consider inflation, too, based on the amount you can expect to see an increase per year.
Just keep in mind that one’s income will not be the same as today as one may stop working completely.
Keep the retirement plan flexible
Retirement planning is not a one-time process. It is continuous and may require modification as you age or based on the circumstances and preferences. Therefore, one should have a flexible retirement plan.
For example, you can have an aggressive investment portfolio in your 20s and 30s as you will have greater chances to make up for any possible revenue losses. But, as you approach retirement, you may want to concentrate on capital protection and safer types of investments.
Based on your needs, you should talk to a financial advisor. You should have a solid understanding of your financial future and what your retirement saving plan should look like. A financial adviser will help in retirement planning and tell you how much you should put away each month to achieve your retirement saving goals and how. Most importantly, you will implement a robust strategy.
If you are looking for a financial advisor for retirement planning in Dubai, contact New Age Insurance Brokers.