Your Most Important “retirement Number” Is How Much You Spend
Every financial advisor on the planet has some suggestion as to what the most important “retirement number” is. Some of them are even valid recommendations ! But what is most often overlooked is how much you will spend .
If you haven’t thought about the basic principle for a while, retirement works like this: Once you have saved enough money, you can stop working and live off what you put off until the end of your days. Sounds simple, right? Except that not everyone in retirement has the same expenses (as they do the rest of your life). One person may want to travel the world and live in an expensive city, while another may want to spend their days in a paid home, sitting quietly on their front porch tending their little home garden.
As personal finance site Budgets Are Sexy explains, this spending gap is the key to understanding your retirement. While you may not know exactly all the costs you will incur as you get older, you can at least try to make a rough estimate:
How can someone tell you that you will need $ 2 or $ 3.5 million without having any idea how much your lifestyle is worth? Does a person living on $ 1,000 a month need the same as a person who makes $ 10,000 a month? Do we all have the same hobbies, dreams, and goals in life? Or are we all so lame that we need to save as many dollars as possible because we’re all doomed?
As you plan your retirement, ask yourself what kind of lifestyle you want to lead. What hobbies do you want to do? How much travel do you want? What medical costs do you think you might face based on your family history and your lifestyle? You will never give a perfect answer, but thinking about how you plan to live will have as much (if not more) impact as blindly following the diagram you saw on the Internet 40 years before retirement.
Finally, the magic number for retirement !! | Budgets are sexy