How much money do you need to retire comfortably?
Have you ever thought of how much money do you need to retire? Have you do some calculations on how much money you need for your retirement funds? Well, if you have not, you ought to give it a serious thought!
Whether you have just graduated from school or working for a few years, it is always good to plan early so that you don’t have to worry about insufficient funds during your retirement age. Decide for yourself whether you want to enjoy life now (including buying those branded goods) and worry later or save more money now so that you can have a comfortable life later (just like the elderly man in the picture above, smiling with lots of money is his hands). Don’t you think the feeling is great?
For me, I will choose the latter one. I’m not saying that you totally can’t enjoy life now but to a certain extent. You can choose to reward yourself by going to the restaurant once in a blue moon with friends or family members or going for a short holiday (to a nearby country or somewhere cheap) once a year. This is to recharge yourself so that you can move further.
Calculation Guide on retirement funds
Listed below are some rough guides for you to take into account when you do your calculation for the amount needed for your retirement nests. You may have more than these; just add according to your needs.
Please note that this is a rough calculation for my retirement nest so that you can have a better view on how much money you will require and start your preparation. You don’t have to follow my calculation exactly because everyone has their own needs and expenditures, just use it as a reference and do your own calculation.
Daily Expenses
- Transport
- Meals
Other Expenses
- Insurances
- Haircut
- Medical/Check up
- Dentist
- Shopping, including grocery, shampoo, facial products, etc
- Gym (monthly payment)
- Dining out (maybe once a month)
- Utilities
- Internet subscription
- Phone bills
- Holiday
- Entertainment
- Housing loan
My monthly expenditures (estimation):
Transport : $150
Meals : $360
Insurances : $950
Haircut : $30
Medical : $50 (not monthly but put in as a guide)
Dentist : $90 (usually once annually)
Shopping : $100 (including daily necessities such as shampoo, shower gel, etc.)
Supplements : $150 (including sports supplements)
Gym : $60
Dining out : $60
Utilities : $50
Internet subscription : $40
Phone bills : $50
Holiday : $2,500 (once or twice annually)
Entertainment : $30
Housing loan : $1,000 (assuming the housing loan is constant)
Total expenditures annually = ($150X12) + ($360X12) + ($950X12) + ($30X12) + ($50X6) + $90 + ($100X12) + ($150 X 12) + ($60X12) + ($60X12) + ($50X12) + ($40X12) + ($50X12) + $2,500 + ($30X12) + ($1,000X12) = $39,550
Expenditures for 50 years = $39,550 X 50 = $1,977,500
Based on inflation of 3% annually = $1,977,500 X 1.03 = $2,036,825
Hence, I will need about $2 million in order to live comfortably during my retirement age. Remember, this only serve as a guide. When doing your calculation, you should factor in when you intend to retire. It also depends on your other expenses besides the above stated and the country you live in.
Of course, you may be saying that you do not need to pay insurances throughout your entire life, which is true. I included it in the 50 years calculation in case there are some unforeseen circumstances. It is better to over-estimate than under-estimate for your retirement funds, right? In the insurances expenses portion, it also included my saving and retirement plans, hence, $2 million should be more than enough.
In case you do not want to base on the 50 years calculation, I have done another calculation of my insurance policies based on 30 years; it will be $1,801,985 after the 3% inflation. Hence, I will need around $1.8 to $2 million to retire comfortably.
For those who have families which include your children expenses in terms of school fees and their daily transport and meals, your other expenses such as cars and parking fees, etc, you can add them accordingly as mentioned earlier.
Savings
The above calculation serves as a guide on how much you will need for your retirement funds. Hence, the earlier you wish to retire, the more money you will have to save right now! Plan how much you can save every month and work your way towards it. Don’t overstress yourself.
If you find that you are not saving enough to meet your goal, try adjusting your monthly expenses. Save a minimum of $1,000 to $2,000 a month so that you can reach your goal earlier. If you can save more, it’s even better.
Thank you for reading. I hope I have helped you in some ways. Remember to subscribe to my blog for more great content!