How much money do I need to save for retirement ?

How to do the right retirement-planning and get a retirement-advantage for retirement-savings ?

This quick guide to retirement savings aims to introduce "How much to save for retirement in UK and around the globe" and presents several practical aspects like early retirement planning, retirement age, pension planning, etc.

How much to save for retirement is an argument, while most of us are getting interested in reaching our 30s.

Thinking of retirement saving immediately brings the following question to our mind, "How do I want to live in the "far" future?"

Travelling all over the world or having a relaxed lifestyle in a cottage somewhere in the countryside?

A new horizon is heading your way and you might actually face the question:Could you be doing more ? And the answer is Yes.

Setting yourself up for a fantastic retirement starts with having a great retirement plan. It's a good solution to set up pension savings goals with a little educated forecast in order to save money and meet your goals once retired.

What does the recent study says about retirement savings ?

A recent study found that Norway ranked number 1 out of 43 countries for retirement security. Switzerland followed at number 2, U.S. stood number 14 on the list, with positive factors of high wealth and economic stability.

Experts have also calculated that the typical workers need a pre-retirement income equivalent to about two-thirds of their final salary for retirement.

According to the Pensions Commission, some may manage with as little as 50%, while others will want 80%, but not 100% because they have paid off their mortgage, no longer have children to bring up, won't face the cost of commuting and, of course, they will have stopped contributing to a pension plan.

It has long been recommended that one million is a nice round number to have saved for retirement.

Today, the archaic notion of retirement has morphed into this. Work for 40 to 50 years. Then, have a party, get a gold watch, go to the beach, sit down on a reclining chair with an umbrella drink and get ready for an exciting 20 or so years of golf.

Obviously, we would not be able to foresee everything. However, to define whether a certain amount is enough to cover for your luxurious retirement requires more than just tapping some figures on the calculators.

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How does retirement calculator works ?

A good retirement planning calculator is based on 4 essential indicators, such as how much is your current annual income, how much are your expenses, the return on your investment, and what is taken away by inflation.

Therefore, maximizing the income, reducing the expenses and protecting against the inflation can be the key to safe retirement. Here are several factors that will give you an insight what can affect your retirement income.


  • Life Expectancy

    • Life Expectancy is growing, and in particular, women’s life span has statistically stretched beyond the average.
    • According to SSA (Social Security Administration) estimates, reaching the age of 90 is becoming more and more achievable.
    • In that context, $1 million in the bank may not be enough to provide a comfortable retirement.
    • If you are in good health and have a family history of long-lived ancestors, then longevity insurance may be a good idea to apply.
  • Location

    • Does you and your partner intend to stay in the same place or move around ? If there is only two of you, do you really need a four-bedroom house ?
    • A shared vision for retirement whether you want to age in same place, downsize, or relocate to new home, can give you the thoughts for planning.
    • Also, consider how your home equity might be the part of your retirement plan.
  • Retirement At 65 Or Later

    • After all, if we are living longer and healthier these days, why not to retire later ? Retiring at the age of 67 or 68, instead of 64 or 65 can mean working a bit longer, but you also get the advantage of seeing your Social Security benefits increasing every year.
    • The evidence proves, prolonging our working years can also maintain our mental activity and affect positively on intellect. Hence, work can also extend the joy of golden years more than you might have otherwise.
  • Earlier Savings

    • Another aspect of pension plan need is the saving itself. All of us constantly have the feeling that we earn the right to spend and maybe even more than we actually do. Thus, thinking of pensioner income, especially when too young to think about retirement makes us feel uneasy.
    • But the earlier we start saving and investing, the less we need to contribute. The savings will have more time to build and accrue interests. The compound interest is the 8th wonder of the world mainly driven by those who have a long time horizon.
  • Retirement Planning

    • To enjoy financial freedom in retirement, you can no longer rely solely on a company's pension plan or Social Security.
    • Instead, it might depend on how skillfully you plan and invest, and whether you make good use of your tax-advantaged savings plans
    • Many people also use a more flexible way of saving- Individual Savings Accounts (ISAs). If you don't have an employer-sponsored pension retirement fund, craft your own with regular, automatic contributions from your savings account.
    • There are typically two types of single funds you can consider: Target Date Funds (based on an anticipated retirement date) and Target Allocation Funds (based on risk tolerance and time horizon).
  • Target a Withdrawal Percentage

    • A common rule of thumb suggests that even if you withdraw 3 to 5% of your total account balance everyyear then you won't run out of money.
    • Using 4% withdrawal of your initial retirement portfolio as a starting point, we can calculate back into an amount that a retiree would need to save in order to retire.
    • For example, if the need is $100,000 per year, the amount needed to retire will be $2,500,000.
  • Retirement without Spending Down Principal

    • An alternative old-school thought assumes a retirement plan which never spends the principal.
    • The goal would be to use dividends, interest, and capital gains to generate income in retirement.
    • Assuming a 3% yield and a $50,000 per year withdrawal, the amount saved prior to retirement would need to be $1,666,667.
  • Schedule a Meeting with a trusted investment advisor

    • Retirement planning is assumption-based planning that attempts to evaluate and interpret future occurrences.
    • Having a person in your team who can look after your financial situation and taxes can be a valuable decision, particularly at transition periods of financial planning.
    • At any point along your journey towards retirement, consider sitting down with a financial advisor.

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