You’ve probably been inundated with all sorts of advice and information on the importance of having a proper retirement plan. Regarding retirement advice Perth, it’s perhaps the most critical. However, a crucial flaw exposes itself once you’ve accepted this truth.
Just how much money do you need once you retire?
For our first bit of retirement advice Perth on this matter, we’ll give you the bad news. There is no magic number. No single number or range will fit everyone. The factors behind this are too personal for a generalisation to exist. If one does exist, it’s quite dishonest or specialised.
Factors such as standard of living, expenses, projected medical costs, and even your age can all play a role.
Now, let’s get some good news. If you’re willing to do the math yourself, you can figure out a reasonable number for your retirement needs.
First, you’ll want to get some crucial information on the table. For example, how old will you be when you retire? Retiring early or late can affect the finances you need.
How much annual income do you want to be generated during your retirement? For this, it’s best to estimate a high number. You want to have cash set aside for emergencies, after all. Assume about 80% of your current salary, allowing you to maintain a good standard of living.
Get the market value of all your savings and investments. You will need this to determine a realistic rate of return.
If possible, have someone help when accounting for inflation. A conservative guess here is 4% annually, but realistically it could go as high as 10%. Estimate on the low end, to be safe.
Do you have a company pension plan? Obtain an estimate of the value from the plan provider. This is just as important as the rest of the components of the equation. In fact, in some cases, it might be the most significant element, as almost everyone has a pension.
Finally, estimate your Social Security benefits.
Before we begin, let’s reconsider inflation. The most straightforward method for planning for retirement is to express things in today’s values. After that, you’ll adjust for inflation to get a more realistic projection.
Now, first, you compute all the numbers in today’s value. After that, apply the assumed inflation to get a more realistic estimate. This will give you somewhat you are dealing with as you make contributions towards your retirement.