Every single person lives a unique lifestyle that requires a certain amount of money. When it comes to retirement planning, they should know how much money they are going to need each year in order to live comfortably according to their lifestyle. However, this number is different for every single person. Someone may live by themselves and have nobody to support but themselves. Other people may have a spouse that needs income, or they may have an illness that requires constant medical attention and care. Everyone needs different amounts of money for their retirement, so it is hard to find an average amount for everyone. There are ways to figure out what your specific average saving at retirement should be. Your unique situation, paired with the salary that you have been making throughout your working career will help you figure out what your savings should be at retirement.
One of the first ways that you can find out if your average savings will be enough at retirement is with the 4% rule. The 4% rule is simple. If you are retiring, or you know how much money you will have when you retire as a whole (usually common with pension plans), then you can use the 4% rule. How it works is that you take the entire net-worth of your retirement portfolio. If you can take 4% of that amount out in the first year of retirement, and adjust that dollar amount each year of inflation, you can create a paycheck that will last a long time depending on the amount you have saved. If you predict that your retirement savings will bet at $500,00, and you take 4% of that in the first year, you will take out $20,000 in the first year. Without inflation, that rule would last you 25 years. That amount of money may not be able to support you throughout your retirement.
When looking at the 4% rule, you can plug in an array of different numbers and divide by 4% to see what you can get out in a single year, and adjust that to inflation. When you finally get to a number that will be comfortable to live on, then you may have found the average amount of savings you will want at retirement. This rule does not give an exact average, and should only be used for estimates. It is not a mathematical formula that should be used in order to figure out what your average savings at retirement should be, but it should be used to get a ballpark average. Always consult a financial advisor for advice with your retirement savings.
If you do not like the 4% rule, or you want another opinion, experts have other advice on how to know what your average savings should be at retirement. As a general rule, you should have between nine and 11 times your salary in retirement saving by the time you retire. This means that you should be saving between 10% and 15% of your salary each year to make sure that you are on your way to having a great average. This will ensure that you can live comfortably in retirement.
When you are trying to decide what your average savings should be upon retirement, you will want to consult an expert to get clear cut numbers. Before you go to a financial advisor, try these methods first. The numbers that you will get will give you an estimated average number that will be comfortable for you to have upon retirement, which will give you a head start on saving.