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As you know, when you're ready to retire – the Motley Fool

The average baby boomer says the ideal age for retirement is 62, according to a recent Bankrate survey. However, want to retire and retire financially are two completely different things.

The ability to retire comfortably is about earning enough income to cover your living expenses for the rest of your life. So before you can say that you are ready to retire, you need to know how much income you need, where it comes from and how much you should save.

  Middle-aged couple

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How much retirement income do you need?

How much money do you have to save before you retire? The most common response from Americans is $ 1

million, while $ 2 million is the second best savings target. However, there is much more to do than to reach a savings target.

Here's the first thing you need to know. Being able to retire comfortably is not just about how much money you've saved. Rather, it's about whether you can generate enough income to cover your expenses during a decades-long retirement.

Think about it. If you need $ 4,000 a month to live a comfortable lifestyle, and you receive $ 1,600 a month from social security and $ 2,400 a month from a pension, then it does not matter how much you have on the bank; Their income is covered independently. On the other hand, if you need $ 4,000 a month, but your only source of steady income is your 1,600 social security benefit, then you need a sizeable nest egg to bridge the gap.

So, how much income do you need to retire? As with most financial issues, there is no universal answer, but there is a good rule of thumb that you can change according to your individual circumstances.

The 80% Rule

This rule of thumb is that you need about 80% of your early retirement income to get the same quality of life after retirement.

You may be wondering why it would not cost 100% of your early retirement income to meet the […] same lifestyle. Well, the 80% rule assumes that while most of your retired living expenses are about the same, two major expenses will disappear if you leave the workforce:

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