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If you’re thinking about how much is enough for retirement, you’re probably contemplating a retirement and need to know how to pay for it. If you are, that’s good because one of the challenges we face is how we’re going to fund our retirement.
Determining then how much retirement savings is enough depends on a number of factors, including your lifestyle and your current income. Either way, you want to make sure that you have plenty of money in your retirement savings so you don’t work too hard, or work at all, during your golden years.
If you’re already thinking about retirement and you’re not sure whether your savings is in good shape, it may make sense to speak with a financial advisor to help you set up a savings plan.
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- 5 Tips to Optimize Your Retirement Account Withdrawals Read Now
- People Who Retire Comfortably Avoid These Financial Advisor Mistakes
How Much Is Enough For Retirement?
Your needs and expectations might be different in retirement than others. Because of that, there’s no magic number out there. In other words, how much is enough for retirement depends on a myriad of personal factors.
However, the conventional wisdom out there is that you should have $1 million to $1.5 million, or that your retirement savings should be 10 to 12 times your current income.
Even $1 million may not be enough to retire comfortably. According to a report from a major personal finance website, GoBankingRates, you could easily blow $1 million in as little as 12 years.
GoBankingRates concludes that a better way to figure out how long $1 million will last you largely depends on your state. For example, if you live in California, the report found, “$1 Million will last you 14 years, 3 months, 7 days.” Whereas if you live in Mississippi, “$1 Million will last you 23 years, 2 months, 2 days.” In other words, how much is enough for retirement largely depends on the state you reside.
For some, coming up with that much money to retire comfortably can be scary, especially if you haven’t saved any money for retirement, or, if your savings is not where it’s supposed to be.
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Your current lifestyle and expected lifestyle?
What is your current lifestyle? To determine how much you need to save for retirement, you should determine how much your expenses are currently now and whether you intend to keep the current lifestyle during retirement.
So, if you’re making $110,000 and live off of $90,000, then multiply $90,000 by 20 ($1,800,000). With that number in mind, start working toward a retirement saving goals. However, if you intend to eat and spend lavishly during retirement, then you’ll obviously have to save more. And the same is true if you intend to reduce your expenses during retirement: you can save less money now.
The best way to start saving for retirement is to contribute to a tax-advantaged retirement account. It can be a Roth IRA, a traditional IRA or a 401(k) account. A 401k account should be your best choice, because the amount you can contribute every year is much more than a Roth IRA and traditional IRA.
1. See if you can max out your 401k. If you’re lucky enough to have a 401k plan at your job, you should contribute to it or max it out if you’re able to. The contribution limit for a 401k plan if you’re under 50 years old is $19,000 in 2019. If you’re funding a Roth IRA or a traditional IRA, the limit is $6,000. For more information, see How to Become a 401(k) Millionaire.
2. Automate your retirement savings. If you’re contributing to an employer 401k plan, that money automatically gets deducted from your paycheck. But if you’re funding a Roth IRA or a traditional IRA, you have to do it yourself. So set up an automatic deposit for your retirement account from a savings account. If your employer offers direct deposit, you can have a portion of your paycheck deposited directly into that savings account.
Related: The Best 5 Places For Your Savings Account.
How long do you expect to live? Have your parents or grandparents lived through 80’s or 90’s or 100’s? If so, there is a chance you might live longer in retirement if you’re in good health. Therefore, you need to adjust your savings goal higher.
Consider seeking financial advice.
Saving money for retirement may not be your strong suit. Therefore, you may need to work with a financial advisor to boost your retirement income. For example, if you have a lot of money sitting in your retirement savings account, a financial advisor can help with investment options.
Figuring out how much is enough for retirement depends on how much retirement will cost you and what lifestyle you intend to have. Once you know the answer to these two questions, you can start working towards your savings goal.
How much money you will need in retirement? Use this retirement calculator below to determine whether you are on tract and determine how much you’ll need to save a month.
More on retirement:
- Find Out Now 7 Questions People Forget to Ask Their Financial Advisors
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- Compare Fiduciary Financial Advisors — Start Here for Free.
- 7 Situations When You Need a Financial Advisor â Plus How to Find One Read More
- 5 Tips to Optimize Your Retirement Account Withdrawals Read Now
- People Who Retire Comfortably Avoid These Financial Advisor Mistakes
Working With The Right Financial Advisor
You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is paying off debt, investing, buying a house, planning for retirement, saving, etc). Find one who meets your needs with SmartAssetâs free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
The post How Much Is Enough For Retirement? appeared first on GrowthRapidly.
Can you retire at 50? On average, people usually retire at 65. But what if you want to retire 15 years earlier than that likeÂ at 50? Is it doable? Below are 10 easy steps to take to retire at 50.Â Retiring early can be challenging. Therefore, SmartAsset’s free tool can match you with Â a financial advisor who can help to work out and implement a retirement income strategy for you to maximize your money.
10 Easy & Simple Steps to Retire at 50:
1. How much you will need in retirement.
The first thing to consider is to determine how much you will need to retire at 50. This will vary depending on the lifestyle you want to have during retirement. If you desire a lavish one, you will certainly need a lot.
But according to a study by SmartAsset, 500k was found to be enough money to retire comfortably. But again that will depends on several factor.
For example, you will need to take into account where you want to live, the cost of living, how long you expect to live, etc.
Read: Can I Retire at 60 With 500k? Is It Enough?
A good way to know if 500k is possible to retire on is to consider the 4% rule. This rule is used to figure out how much a retiree should withdraw from his or her retirement account.
The 4% rule states that the money in your retirement savings account should last you through 30 years of retirement if you take out 4% of your retirement portfolio annually and then adjust each year thereafter for inflation.
So, if you plan on retiring at 50 with 500k for 30 years, using the 4% rule you will need to live on $20,000 a year.Â
Again, this is just an estimation out there. You may need less or more depending on the factors mentioned above. For example, if you’re in good health and expect to live 40+ years after retiring at 50, $500,000 may not be enough to retire on. That’s why it’s crucial to work with a financial advisor.
|Get Matched With 3 Fiduciary Financial Advisors|
|Managing your finances can be overwhelming. We recommend speaking with aÂ financial advisor. TheÂ SmartAssetâs free matching toolÂ will pair you with up to 3 financial advisors in your area.
Hereâs how it works:
1.Â Answer these few easy questionsÂ about your current financial situation
2. In just under one minute, the tool will match you with up to three financial advisors based on your need.
3. Review the financial advisors profiles, interview them either by phone or in person, and choose the one that suits yourâ needs.
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2. Maximize your tax-advantaged retirement accounts.
Once you have an idea of how much you need in order to retire at 50, your next step is to save as much as possible at a faster rate. If you are employed and you have a 401k plan available to you, you should definitely participate in it. Nothing can grow your retirement savings account faster than a 401k account.
See: How to Become a 401k Millionaire.
That means, you will need to maximize your 401k contributions, for example. In 2020, and for people under 50, the 401k contribution limit is $19,500. Also, take advantage of your company match if your employee offers a match.
In addition to the maximum contribution of $19,500, your employer also contributes. Sometimes, they match dollar for dollar or 50 cents for each dollar the worker pays in.
In addition to a 401k plan, open or maximize your Roth or traditional IRA. For an IRA, it is $6,000. So, by maximizing your retirement accounts every year, your money will grow faster.
3. Invest in mutual or index funds. Apart from your retirement accounts (401k, Roth or Traditional IRA, SEP IRA, etc), you should invest in individual stocks or preferably in mutual funds.Â
4. Cut out unnecessary expenses.
Someone with the goal of retiring at 50 needs to keep an eye on their spending and keep them as low as possible. We all know the phrase, “the best way to save money is to spend less.”
Well, this is true when it comes to retiring 15 years early than the average. So, if you don’t watch TV, cancel Netflix or cable TV. If your cell phone bill is high, change plans or switch to another carrier. Don’t go to lavish vacations.
5. Keep an eye on taxes.
Taxes can eat away your profit. The more you can save from taxes, the more money you will have. Retirement accounts are a good way to save on taxes. Besides your company 401k plan, open a Roth or Traditional IRA.
6. Make more money.
Spending less is a great way to save money. But increasing your income is even better. If you need to retire at 50, you’ll need to be more aggressive. And the more money you earn, the more you will be able to save. And the faster you can reach your early retirement goal.
7. Speak with a financial advisor.
Consulting with a financial advisor can help you create a plan to. More specifically, a financial advisor specializing in retirement planning can help you achieve your goals of retiring at 50. They can help put in a place an investment strategy to put you in the right track to retire at 50. You can easily find one in your local area by using SmartAsset’s free tool. It matches users with financial advisors in just under 5 minutes.
8. Decide how you will spend your time in retirement.
If you will spend a lot of time travelling during retirement, then make sure you do research. Some countries like the Dominican Republic, Mexico, Panama, the Philippines, and so many others are good places to travel to in retirement because the cost of living is relatively cheap.
While other countries in Europe can be very expensive to travel to, which can eat away your retirement money. If you decide to downsize or sell your home, you can free up more money to spend.
9. Financing the first 10 years.
There is a penalty of 10% if you cash out your retirement accounts before you reach the age of 59 1/2. Therefore, if you retire at 50, you’ll need to use money in other accounts like traditional savings or brokerage accounts.
10. Put your Bonus, Raise, & Tax Refunds towards your retirement savings.
If retiring at 50 years old is really your goal, then you should put all extra money towards your retirement savings. That means, if you receive a raise at work, put some of it towards your savings account.
If you get a tax refund or a bonus, use some of that money towards your retirement savings account. They can add up quickly and make retiring at 50 more of a reality than a dream.
Retiring at 50: The Bottom Line:
So can I retire at 50? Retiring at 50 is possible. However, it’s not easy. After all, you’re trying to grow more money in less time. So, it will be challenging and will involve years of sacrifices, years living below your means and making tough financial decisions. However, it will be worth it in the long run.
- How Much Is Enough For Retirement
- How to Grow Your 401k Account
- People Who Retire Comfortably Avoid These Financial Advisor Mistakes
- 5 Simple Warning Signs Youâre Definitely Not Ready for Retirement
Speak with the Right Financial Advisor
You can talk to a financial advisor who can review your finances and help you reach your goals (whether it is making more money, paying off debt, investing, buying a house, planning to retire at 50, saving, etc). Find one who meets your needs with SmartAssetâs free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
The post How To Retire At 50: 10 Easy Steps To Consider appeared first on GrowthRapidly.
Getting a financial advisor in your 20s is a responsible thing to do. At the every least, it means that you are serious about your finances. Finding one in your local area is not hard, especially with SmartAsset free matching tool, which can match you up to 3 financial advisors in under 5 minutes. However, you must also remember that a quality financial advisor does not come free. So, before deciding whether getting a financial advisor in your 20s makes financial sense, you first have to decide the cost to see a financial advisor.
What can a financial advisor do for you?
A financial advisor can help you set financial goals, such as saving for a house, getting married, buying a car, or retirement. They can help you avoid making costly mistakes, protect your assets, grow your savings, make more money, and help you feel more in control of your finances. So to help you get started, here are some of the steps you need to take before hiring one.
Need help with your money? Find a financial advisor near you with SmartAsset’s free matching tool.
1. Financial advice cost
What is the cost to see a financial advisor? For a lot of us, when we hear “financial advisors,” we automatically think that they only work with wealthy people or people with substantial assets. But financial advisors work with people with different financial positions. Granted they are not cheap, but a fee-only advisor will only charge you by the hour at a reasonable price – as little as $75 an hour.
Indeed, a normal rate for a fee-only advisor can be anywhere from $75 an hour $150 per hour. So, if you’re seriously thinking about getting a financial advisor in your 20s, a fee-only advisor is strongly recommended.
Good financial advisors can help you with your finance and maximize your savings. Take some time to shop around and choose a financial advisor that meets your specific needs.
2. Where to get financial advice?
Choosing a financial advisor is much like choosing a lawyer or a tax accountant. The most important thing is to shop around. So where to find the best financial advisors?
Finding a financial advisor you can trust, however, can be difficult. Given that there is a lot of information out there, it can be hard to determine which one will work in your best interest. Luckily, SmartAsset’s free matching tool has done the heavy lifting for you. Each of the financial advisor there, you with up to 3 financial advisors in your local area in just under 5 minutes.
3. Check them out
Once you are matched with a financial advisor, the next step is to do your own background on them. Again, SmartAsset’s free matching tool has already done that for you. But it doesn’t hurt to do your own digging. After all, it’s your money that’s on the line. You can check to see if their license are current. Check where they have worked, their qualifications, and training. Do they belong in any professional organizations? Have they published any articles recently?
Related: 5 Mistakes People Make When Hiring a Financial Advisor
4. Questions to ask your financial advisor
After you’re matched up with 3 financial advisors through SmartAsset’s free matching tool, the next step is to contact all three of them to interview them:
- Experience: getting a financial advisor in your 20s means that you’re serious about your finances. So, you have to make sure you’re dealing with an experienced advisor — someone with experience on the kind of advice you’re seeking. For example, if you’re looking for advice on buying a house, they need to have experience on advising others on how to buy a house. So some good questions to ask are: Do you have the right experience to help me with my specific needs? Do you regularly advise people with the same situations? If not, you will need to find someone else.
5 Reasons You Need to Hire A Financial Consultant
- Fees – as mentioned earlier, if you don’t have a lot of money and just started out, it’s best to work with a fee-only advisor. However, not all fee-only advisors are created equal; some charges more than others hourly. So a good question to ask is: how much will you charge me hourly?
- Qualifications – asking whether they are qualified to advise is just important when considering getting a financial advisor in your 20s. So ask find about their educational background. Find out where they went to school, and what was their major. Are they also certified? Did they complete additional education? if so, in what field? Do they belong to any professional association? How often do they attend seminars, conferences in their field.
- Their availability – Are they available when you need to consult with them? Do they respond to emails and phone calls in a timely manner? Do they explain financial topics to you in an easy-to-understand language?
If you’re satisfied with the answers to all of your questions, then you will feel more confident working with a financial advisor.
In sum, the key to getting a financial advisor in your 20s is to do your research so you don’t end up paying money for the wrong advice. You can find financial advisors in your area through SmartAsset’s Free matching tool.
- Find a financial advisor – Use SmartAsset’s free matching tool to find a financial advisor in your area in less than 5 minutes. With free tool, you will get matched up to 3 financial advisors. All you have to do is to answer a few questions. Get started now.
- You can also ask your friends and family for recommendations.
- Follow our tips to find the best financial advisor for your needs.
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- How to Choose A Financial Advisor
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- 5 Mistakes People Make When Hiring A Financial Advisor
Thinking of getting financial advice in your 20s? Talk to the Right Financial Advisor.
You can talk to a financial advisor who can review your finances and help you reach your saving goals and get your debt under control. Find one who meets your needs with SmartAssetâs free financial advisor matching service. You answer a few questions and they match you with up to three financial advisors in your area. So, if you want help developing a plan to reach your financial goals, get started now.
The post Steps to Getting A Financial Advisor in your 20s appeared first on GrowthRapidly.