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A Guide to Calculating Your Retirement Savings

by Ohio Digital News

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On the one hand, the idea of retirement is exhilarating. On the other, there is concern that you won’t have sufficient savings. Gaining clarity about your financial future can help you decide when to retire and how much you’ll need to comfortably do so. There are distinct moves you can make, including using Yieldstreet’s free retirement calculator. Here’s a guide to calculating your retirement savings.

Decide What Your Lifestyle Will Be

How much money you’ll need for retirement depends partly on your expected lifestyle. The prevailing rule of thumb is that if you set aside 80% of your pre-retirement income, you will likely have enough retirement savings to maintain your current lifestyle. That’s because you’ll no longer be paying into Social Security or contributing to your 401(k) account or other savings plan. 

Getting to that 80% means factoring in retirement account withdrawals and any other expected income such as Social Security, a pension, or annuity. Note, though, that the amount of any withdrawals from a traditional individual retirement account, 401(k), or any other tax-deferred savings account will be decreased by the amount of taxes paid. 

Just be sure to establish a retirement spending plan along with anticipated income, averaging in how long you expect to live. Yieldstreet’s easy-to-use retirement calculator can help you figure out how much you’ll ultimately need for your hard-earned Golden Years.

Factor in Medical Care

How much do I need to retire? The answer to that question must also include healthcare expenses. Fidelity Investments estimates that the average couple will need $315,000 after taxes to cover healthcare costs throughout their retirement, excluding long-term care. For 2024, the standard monthly premium for Medicare Part B, which covers most physician services, is at least $174.70, depending on your income. In addition, you must pay 20% of the amount approved by Medicare for most medical services as well as an annual $240 deductible.  

How Much Will Your Savings Earn?

While stocks have earned 10.13% on average annually for nearly a century, it’s impossible to know what they will earn in the next two decades. However, most individuals don’t keep all their retirement savings in a single type of investment. Increasingly, for example, investors are putting more of their savings into less volatile, private-market alternative asset classes such as art and real estate. Such alternatives can diversify retirement portfolios as well as mitigate risk, protect against inflation, and even improve returns. Having said that, some insights suggest that you shoot for 2.5% returns after inflation.   

Calculating how much you will need for retirement so that you don’t run out of money depends on a number of factors, including your anticipated lifestyle, healthcare expenses, and what your savings will earn. Yieldstreet’s retirement calculator makes figuring it out simple. Just make sure you begin preparing for retirement as early as possible so that you can fully enjoy your post-working years.

Source: Yieldstreet

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