What’s your retirement number? $1 million…$2…$3…$4… maybe $5 million?
It’s time to paint your retirement picture. How does it look? Consider your income needs:
- House payment
- Car payment
- Routine daily living expenses
It’s time to think about your retirement goals because your daily actions TODAY will impact your future lifestyle and flexibility. I’m talking RETIREMENT money, not Walmart greeter money.
So, let’s say you answered $1 million. Did you know that inflation impacts the value of our future dollars? Over time, inflation increases the price levels for goods and services. This means that if you have $1,000,000 today, it’ll actually be worth close to $550,000 in 30 years when you’re closer to retirement (assuming 2% inflation).
Using the assumptions above, let’s say we retired today with our $1M goal met. But, let’s spend the money like the true value of $550,000 as outlined above. Here’s a glimpse of how it might look:
What’s the significance?! $2,400 per month is not a ton of money, especially if it’s your only source of retirement income. If your house is paid off, this money starts to feel a little more comfortable. So, how do we even get to $1M? Let’s compare slow and steady vs. aggressive saving:
Slow & Steady (starting at age 27, assume 6% yearly growth until age 59): Household income $100,000. Save 10% for retirement, both employers offer 3% match, total yearly contributions are $13,000 from age 27 to age 40. Then, one spouse stops working and thus stops contributing. The working spouse continues to contribute 10% and gets the 3% match through age 59.
Result: $1M at age 59! Over your lifetime, you invested approximately $305,500.
Aggressive (same assumptions as above): Household income $100,000. Save 20% for retirement, both employers offer 3% match, total yearly contributions are $23,000 for 7 years. Now you’ve built a large foundation with a longer investment time horizon. Then, one spouse stops working and thus stops contributing. The working spouse continues to contribute 10% and gets the 3% match through age 59.
Result: $1M at age 59! Over your lifetime, you invested approximately $239,000.
*Starting later than age 27? You’ll need to save more money and/or save for a longer period of time…the sooner you start, the better! And hey, the comparison between slow & steady vs. aggressive savings are just two examples. The goal here is that you START planning, find what works for you, and kick some ass!