What’s Your Number?

You have probably seen the commercials where people are walking around carrying their “number” – the amount they need to have in their retirement account before they can actually retire.  So what is your “number”?  There are several factors that affect what this number should be.

First of all, when do you plan to retire?  Obviously, the longer you work, the shorter your retirement years will be, which means less money is needed.  Another factor is how much you need to live on.  If you are looking forward to a long retirement (more than 20 years), your funds have to last that long as well.

To help this along, plan to draw no more than 4% from your retirement fund the first year, and adjust upward for inflation each year thereafter.  That means if you will need $40,000 per year from your retirement savings the first year, you will need to have $1 million saved.

Social Security is also a factor in the equation.  Many people are counting on this to fund their retirement.  However, if you will work 10 years or more before retiring, your annual Social Security report states that if the law doesn’t’t change, you should only count on around 75% of the projected monthly benefit.

You also need to factor in inflation.  To use the earlier example, $40,000 today adjusted for inflation equals more than $52,000 in 10 years.

These are sobering statements, however, there is hope.  The best thing you can do is to start planning now.  Consult a financial planner, or look online for a retirement calculator.  At least you can get a picture of where you are currently headed, and how you can get to where you want to be.

God gives us a great picture of planning in Proverbs 6:6-8 using one of the smallest of creatures, the ant.  Start saving now!

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