$ 1 million? $ 500,000? The importance of your retirement ‘number’, at any age

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Planning a comfortable retirement requires serious thought, it also requires math. There is no simple answer to the question, “How much do I need to save for retirement?” However, there are numerous factors to consider when calculating that “magic” number. Working through the calculations of various retirement-related expenses and lifestyle options is a much better approach than guessing how much you’ll need, whether it’s $ 500,000, $ 1 million, or even more.

Retirement Tip of the Week: Don’t worry about having a concrete number to hit for your retirement savings, at least with a few decades left, but think carefully about the factors that will eventually determine how much you need for retirement. . “Knowing your target number, especially when you’re away, is not helpful,” said Corbin Blackwell, a certified financial planner at online investment firm Betterment. “It can feel so overwhelming.” Whether it’s 30 years to go to retirement or just 10, there are several lifestyle choices people will have to make, including where to live, whether to undertake an expensive hobby like traveling the world, or how much money (if any) leave relatives. There are also financial components that no one can avoid, such as taxes or health expenses. And then there are the unknowns, like longevity and unexpected personal and global crises. Do you have any questions about your retirement, including where to live? See the “Help me retire” column on MarketWatch. MarketWatch has partnered with NewRetirement to offer readers a retirement savings planner that can help people think broadly about their retirement goals. It incorporates many of the numbers that future retirees will need to consider, such as: current age and life expectancy; civil status; entry; expected Social Security benefits and age to claim; retirement savings account balances; plus anticipated current and future monthly expenses. The tool then breaks down the timeline to and during retirement, showing when the person will use their retirement assets and how much they could expect to have or need. The planner can be even more comprehensive if users share additional details such as their goals for leaving a legacy, what they plan to do in retirement, or whether they will receive a pension or purchase an annuity.

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There is also a more basic calculator available, which takes into account marital status, expected retirement age, and anticipated monthly expenses and considers alternatives, such as waiting to claim Social Security until age 70 or downsizing to a less expensive home. during retirement. NewRetirement and MarketWatch also have other calculators on the site, including ones that break down retirement income, net worth, or when to retire. Naturally, not everyone knows how much they will spend in retirement, if they will have excessive health bills and what their housing situation will be like (or even where it will be), especially when retirement is not for a few more. decades. The numbers don’t have the same meaning without some of these unknowns. For those who don’t know all of these numbers yet, one strategy is to start from where you can, Blackwell said. A solid figure right now is not nearly as beneficial as seeing what you can save and where it can make a difference in your personal finances. People just starting out in their careers may be limited by their cash flow, so they should try to make small but significant achievements, such as meeting an employer’s 401 (k) equivalent, increasing the amount they save by 401 (k) even. lightly, adding a couple of dollars to your individual retirement account or avoiding unnecessary purchases. (Don’t cut out all the luxuries or nonessential expenses – depriving yourself of the little joys isn’t helpful, either.) Online calculators like NewRetirement’s, as well as those offered by other financial firms (such as Betterment, Fidelity, and Vanguard), can help provide a general idea of ​​how to plan, but remember, there will be a lot of twists and turns toward retirement along the way. along the way. . Want more tips for your retirement savings journey? Read the “Tips for Retirement” column on MarketWatch