3 Step Retirement Planning

Posted October 11, 2008 by Bernz

Better retirement planning begins with understanding the basics. Now that you’re aware of a few things you can do to start saving and generating more income. Here are 3 easy steps to determine how big your retirement fund will need to be.

1. Determine how much money you will need to maintain your current lifestyle. It helps to also consider what luxury items and activities you will be willing to part with in case your nest egg comes up short.

2. Project your income. Include social security, pensions, annuities, other personal investments as well as any potential earnings from a part time job, consultant fees, or other miscellaneous income streams. Find out the amount you can expect to receive in Social Security income here.

3. Subtract your expenses from your income and then multiply the amount by 20. This will give you a good projection of what you’ll need to have in your portfolio. For instance, if you estimate your retirement spending will be 60,000 annually and you anticipate receiving 15,000 from social security payments then you’ll need to withdraw 45,000 from your portfolio each year. This means your retirement savings should be somewhere in the range of 900,000.


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