Question – How much will I need to save for a comfortable retirement?

Answer –  A big question but the answer is of course going to be quite different depending upon your circumstances, needs and wants.  Some critical factors include

  • Expected life expectancy post retirement
  • Expected returns on your savings
  • Inflation between now and retirement
  • The income you need for the lifestyle you want

We could also add social security payments but as you want to live comfortably, social security has been left out. Also some people want to leave a lump sum to family and or charities. This is a very personal choice and not included.

It’s a great question and you can review various options with the calculators on the Tools page

Fast calculation – Cheat Sheet

If you want to know the ‘capital sum’ that would generate the income you need, without eating into the capital value, here is a simple method.

Step one –  Calculate/estimate how much income you need in retirement

Step two – divide the income number by the interest rate you can expect to earn.

For example, if you want to receive $50,0000 of income and you can earn an interest rate of 3% (0.03). The lump sum required would be $50,000 / 0.03 = $1,666,666.

If you could earn 5% the capital sum would be $50,000 / 0.05 = $1,000,000.

You should note that the lump sum does not take into account current or future inflation which highlights the need to have growth pre and post retirement in your portfolio.

See a professional financial adviser

A financial adviser will be able to discuss the critical issues of investment risk, tax and social security which may impact your final results.

Many aspects are beyond your control, for example the fluctuation in the investment markets. A good adviser will seek ways to supply a regular income that is least impacted by market fluctuations.

To help find a financial adviser for you, read this post for a great checklist – Find a Financial Adviser – 8 Questions You Must Ask


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