Those days, it is getting more and more likely that you won’t be able to count on a government pension, if you are in your thirties or under. The retirement age keeps getting pushed back, and with a growing number or retirees who are living longer and longer, there may not be enough funds available to guarantee everyone gets a comfortable pension like the previous generations. So it is up to you to make sure that happens, with private savings and smart investments. Here are a few tips to make sure your nest egg will cover your retirement needs.
Those things are fantastic. You just need to enter how much you want to have in retirement, and they will tell you how much you need to save today, and every month for the years you have left in the workforce. Remember that you need to adjust for inflation, $1,000 today will buy you more things than $1,000 in 30 years.
But by then, you will not have kids to support, and your mortgage should be paid off. Still, keep a good margin, and be really optimistic regarding your life expectancy. I would shoot for 95 years, better safe than sorry. So if you want to retire at age 60, you need to cover 35 years of living expenses. That is almost the time you spent working!
If you only need to cover your basic living expenses, because you plan on not having a mortgage, remember you may have new expenses, like a higher healthcare premium, medical bills, or gifts to your children and grandchildren.
Even at a modest $2,500 per month, 35 years of living expenses requires you to have saved just over $1,000,000 (main house not included) by the time you retire.
Only persistence will get you there, and if you have time on your site, there is nothing to worry about.
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As I said previously, the key to setting up a comfortable nest egg for your retirement is an early start. Compound interest is on your side, growing your nest egg slowly but surely, up to a point where you will earn more interest than the capital you initially invested.
No amount is too small if you start early. Again, if you are not a spreadsheet expert, a quick online search will help you figure out how much $100 a month add up to over the course of 40 years. At 5% interest, it is over $150,000!! For just $100… Never underestimate compound interest.
If you lived or worked in Australia, keeping all your superannuation in one fund can maximize potential growth over time, Suncorp can help you find lost superannuation.