https://www.patreon.com/Jellyman_Investing
Retirement Planning is not as hard as you think. With so many online calculators to help you, it doesn't take long to get some basic figures.
To perform the calculation, we need some basic figures. You can put your values in if you'd like. If you'd also like to see this in writing, be sure to check out my Patreon where I'll have an article with the same title. Here we go.
We need to start with some basic figures. Do not get bogged down with trying to get this specific because no matter what you do, it'll never be specific. Not only is it a waste of time, but the accuracy is not actually needed. As you'll see, we'll very quickly be able to make adjustments as our life changes.
First start by determining your age, your target retirement age and when you think you'll die. This gives you how many years you have left to retire, then how many years of life where you'll need money to live off. A few assumptions though.
Assuming your house is paid off by this time greatly reduces monthly expenses. But also keep in mind that you'll be older with more medical bills and possibly some dependents. Hopefully you'll have no debt by then.
Lets plug in some values. Assume my age is 35, retirement target is 70 and I'll die at age 90. that gives me 35 years of good investment time and 20 years of survival. Now because we can never get these values perfect, we can add a margin of safety. That means simply beefing up the figures. Instead of dying at 90, we'll die at age 100. Instead of age 35 to invest, we increase to 40. By making these conservative changes, it adds room for the unexpected. For now, we'll keep the figures the same.
Assume our monthly expenses at age 70 is $5k. That means, for a given year, our total yearly expenses are $60k. If we plan to live for 20 years, then it's simply $60k times 20 giving us: $1.2M.
Wow. So far so good. Now you might be saying, why on earth do I need to worry about this if I have Superannuation or a retirement fund? Doesn't that take care of me?
My answer is…'hopefully'. What we learned from the COVID pandemic and many world changing events of the past, is that we never know what the future is going to look like. Placing all our bets on super is putting all our eggs in one basket. Superannuation is also just a company. Its made up of people. People who can make mistakes, charge incorrect fees, make bad investment decisions and more.
By taking our retirement in our own hands, we can treat Super as a back up retirement fund. How great is that? Two retirement plans!
I'll also add, that should your investment plan for retirement work really well, it can also lead to early retirement. An added bonus.
With our retirement fund calculated we can one of many investment calculators to determine how much to invest.
https://www.calculator.net/investment-calculator.html
(Be sure to check my patreon for links)
According to the website, its approximately $350 a month at 10% annual return will give around $1.2M.
Now should interest rates be better then you wont need to invest as much. For example, if interest rates are 12% then youll only need to invest $200. I leave it to you to play with the numbers. But this at least gives you as baseline of what needs to be done.
https://www.patreon.com/Jellyman_Investing
Retirement Planning is not as hard as you think. With so many online calculators to help you, it doesn't take long to get some basic figures.
To perform the calculation, we need some basic figures. You can put your values in if you'd like. If you'd also like to see this in writing, be sure to check out my Patreon where I'll have an article with the same title. Here we go.
We need to start with some basic figures. Do not get bogged down with trying to get this specific because no matter what you do, it'll never be specific. Not only is it a waste of time, but the accuracy is not actually needed. As you'll see, we'll very quickly be able to make adjustments as our life changes.
First start by determining your age, your target retirement age and when you think you'll die. This gives you how many years you have left to retire, then how many years of life where you'll need money to live off. A few assumptions though.
Assuming your house is paid off by this time greatly reduces monthly expenses. But also keep in mind that you'll be older with more medical bills and possibly some dependents. Hopefully you'll have no debt by then.
Lets plug in some values. Assume my age is 35, retirement target is 70 and I'll die at age 90. that gives me 35 years of good investment time and 20 years of survival. Now because we can never get these values perfect, we can add a margin of safety. That means simply beefing up the figures. Instead of dying at 90, we'll die at age 100. Instead of age 35 to invest, we increase to 40. By making these conservative changes, it adds room for the unexpected. For now, we'll keep the figures the same.
Assume our monthly expenses at age 70 is $5k. That means, for a given year, our total yearly expenses are $60k. If we plan to live for 20 years, then it's simply $60k times 20 giving us: $1.2M.
Wow. So far so good. Now you might be saying, why on earth do I need to worry about this if I have Superannuation or a retirement fund? Doesn't that take care of me?
My answer is…'hopefully'. What we learned from the COVID pandemic and many world changing events of the past, is that we never know what the future is going to look like. Placing all our bets on super is putting all our eggs in one basket. Superannuation is also just a company. Its made up of people. People who can make mistakes, charge incorrect fees, make bad investment decisions and more.
By taking our retirement in our own hands, we can treat Super as a back up retirement fund. How great is that? Two retirement plans!
I'll also add, that should your investment plan for retirement work really well, it can also lead to early retirement. An added bonus.
With our retirement fund calculated we can one of many investment calculators to determine how much to invest.
https://www.calculator.net/investment-calculator.html
(Be sure to check my patreon for links)
According to the website, its approximately $350 a month at 10% annual return will give around $1.2M.
Now should interest rates be better then you wont need to invest as much. For example, if interest rates are 12% then youll only need to invest $200. I leave it to you to play with the numbers. But this at least gives you as baseline of what needs to be done.