Wednesday, September 14, 2016

How Much Money Do You Need to Retire?

Retiring has become harder to do nowadays than it was in the past. With rising market prices and job instability and scarcity, people find themselves working more than 40 hours per week just to make ends meet. For the select few who do manage to earn money, most of it is splurged into unnecessary purchases, like the newest smartphone model or a plasma screen TV. Before spending your hard-earned paycheck, ask yourself "how much money do I need to retire?" Here's four ways you can answer that important question.

Look at Your Lifestyle

Are you budget-savvy or a shopper by heart? There's no need to be ashamed. The more accepting you are of your chosen lifestyle, the easier it will be to gauge the amount of money you can live off of during retirement. Of course, people who can't help shopping must be prepared to work more hours or get better paying jobs to compensate.

Identify Any Dependents

Even if they are not legally listed as dependents under you, see if you have people who rely on you for their basic needs. If you have multiple children and spouse to feed, you'll want to think about them when estimating a good retirement fund. If, however, your children are already well beyond their teenage years and are fully-functioning adults of society, it's perfectly normal to let them provide for themselves.

Build an Investment Portfolio

If you have a 401(K), Roth IRA, or any other investment plan that pays out money during your retirement, the amount of cash you need in hand can be significantly lower than what you would have needed without these portfolios cushioning your retirement. As early as possible, set up an individual trading account for yourself. Try to buy long-term assets that pay steady dividends. This will also help speed up your ability to retire.

Take Care of Yourself

The healthier your lifestyle is, the less risk you have in getting hospitalized or prescribed with medication during your retirement age. If you are uncovered or inadequately covered by an insurance plan, this can be financially catastrophic. Live a healthy life by doing regular exercise and eating a well-balanced diet.

Retirement should be a time of enjoyment and worry-free adventure. Use the four tips above to gauge just how much money you will need before being afforded the option to leave your job and travel the world or spend more time with family.

David Milberg is an experienced investment banker who hails from NYC.

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