Think of the people you know who have retired. Are they living on a lower fixed income? Social security and pension plans alone are not enough to live on. You haven’t even started your career yet but when you do you’ll need to start planning for retirement!
According to www.schwabplann.com , for every 5 years you put off investing for retirement you will have to double your monthly investing amount to achieve the retirement income needed to sustain independence as a retiree.
Not only are you trying to figure out how much income you need to support yourself and your family over the next 45 – 50 years, but you’re estimating how much you’ll need to maintain a particular retirement lifestyle. Do you plan on staying in your home, having the mortgage paid off, and living a modest lifestyle? Or do you plan on traveling, golfing, and living in a retirement community?
Most expenses will decrease like taxes, savings expenses, shelter, education, apparel, and transportation. However, there will be cost increases for health care, utilities, and entertainment. Most financial planners estimate a replacement wage ratio of 70% - 80%.
The banking institutions do not pay a very high-interest rate so you will need to seek long-term investments like stocks, bonds, and mutual funds. Also, take advantage of workplace retirement plans and IRAs.
