Saving For Retirement: The Quest For Success

Posted on October 16, 2012 at 3:15 pm

(Investopedia) The main goal of a successful retirement program is to ensure you will have sufficient financial resources to maintain or improve your lifestyle during your retirement years. If you want to travel and make more purchases in retirement, you will have to save more. How much you want to save will depend on how you want to spend your retirement.

Save Enough
According to some financial planning experts, to do so, you will need to save enough so that your retirement income is in the range of 70-80% of your pre-retirement income.

You will need a higher percentage if you plan to improve your standard of living. If you have more expenses in retirement than before retirement, your retirement income may have to be more than your pre-retirement income.

Be Sure to Plan
Building such savings requires careful planning, which includes assessing your current assets, the number of years left until retirement and how much you’ll be able to save during your pre-retirement years.

In this article, we list some of the steps to take when implementing your retirement program.

Determine What You Will Need
One popular approach to retirement planning starts with determining how much you’ll need to finance your retirement years.

This is usually based on projected cost-of-living increases, the number of years you’re likely to spend in retirement and the lifestyle you plan to lead during retirement.

But projecting an amount isn’t an exact science: the years you spend in retirement may be more or less than you project, and the same may go for cost-of-living increases.

However, a comprehensive outlook and some thought will help to provide realistic projections.

Here are some factors to consider:

• Your projected everyday living expenses
• Your life expectancy
• Your projected costs
• Your resources other than your retirement savings that cover unplanned expenses; such resources may include long-term care insurance, annuity products and health insurance
• Your property: if you own your home (i.e. have no outstanding mortgage balance), or will own your home by the time you retire, you have the option of selling it or obtaining income through a reverse mortgage.
• Your intended lifestyle during retirement: do you plan to lead a quiet retirement or do things like travel around the world and other activities that may be expensive?

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