How Much Money Do You Need in Retirement?

Your answer usually depends on your yearly expenses and spending.  You can make your own Retirement Savings Plan by following these easy steps:  

(1) Add up your monthly bill payments, including debit and credit withdrawals! 

(2) Multiply your monthly sum by 12.   

(3) To factor in the effects of inflation, you could use an online inflation calculator.

(4) Add in Your future projected Social Security and/or pension amount.  To check your Social Security estimate, visit SSA.gov

(5) Estimate how many years your income will have to last. Remember we are living longer.  

(6) Now, you can set your monthly savings goal.  

(7) Even if you start with small amounts at first, your savings will add up when you use the magic of “compound interest!”  Compound interest is interest you earn not only on your first contribution, but also on accumulated amounts each year!   For example, if you saved $20.00 a week, you will have $1,326 by year’s end.  In 15 years, you will have $36,000 because of compound interest.  Imagine how saving $100 or more each week could affect your future!

To start your automatic savings plan, consider opening an Individual Retirement Account (IRA) this year.  To qualify, you will need to have earned at least this amount in salary or self-employment income. 

The max contribution is based your age: (under age 50 - $5500) and over age 50 - $6500).   

Why contribute to an IRA?  You can deduct your full IRA contribution if your AGI in 2014 is $60,000 –single, or is less than 96,000 -married filing jointly.    

Source Ed Slott’s “Decision Guide,” 2012.  www.irahelp.com.   To find out more about starting Your Own automatic savings IRA plan, email education@themilestonecenter.com or call 330-644-0284.

 

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