How Much Money Do You Need to Retire?

It can become an obsession, wondering how muchand stick with it for 3 months to get a feel for how
money is enough money to safely retire. It can alsoto forecast expenses out for 6 or 12 months. This
be something that people refuse to address. For awill be invaluable in calculating your retirement nest
certain percentage of the population, the idea ofegg.
ever retiring seems a pipe dream. In a recent studyThere is one great way to help prepare for retiring
of people over 50, 17% of them said they have notwith enough money to secure your lifestyle and that
saved any significant money for retirement andis by paying off your house. If you can eliminate a
expected that they would be working for another 20mortgage payment during your golden years, you will
years.take away a big chunk of expenses. Obviously there
There is a way to find the dollar amount that youwill be property taxes and insurance, but the house
need to retire in relative safety -- protecting youritself will be yours. At that point you have the
lifestyle and your assets. As with many thing, itpossibility of a reverse mortgage in your future. A
requires some soul searching.To begin, first getreverse mortgage withdraws equity from your home
together a month's worth of expenses. You need toslowly. Over the course of 15 or 20 years, you will no
know how much it costs you now to live eachlonger own the home. This is risky, in my opinion,
month. If you don't think you are good with financesbecause you do not know how long you will live.
or if your financial house is not in order, now's theWhat if you find yourself, at age 80, looking for an
time to change that.apartment to rent? For many people, however, it
Once you have the month's expenses nailed down, itcould be a great way to have extra income.
is time to assess what those expenses are. HowAll of this hasn't gotten you to the answer, has it?
much of your income goes to housing? How much toHow much money do you need to retire? Let's go
car payments? How much for eating out orback to your monthly expense sheet. If your
entertainment? How much to credit cards? It isexpenses come up, total, to be $5,000 a month then
important to see where your money goes. Ayou will need $60,000 a year in income. If you are
balanced expense sheet will have no more than anot working at all, then the money has to come
quarter of your income spent on housing, and nofrom investments. You can safely withdraw 4% of
more than an eighth spent on car payments. Theseyour principle each year. So in order to have $60,000
days that is where many people's finances fall apartincome each year, you need to have just shy of 2
-- they have too much house and they're driving toomillion dollars invested.
much car.In other articles we can explore how to further
What I will propose next may seem radical: pay offassess your expense sheet. Will you want to retire
your debt. If you are like 85% of Americans, at leastto Arizona or Florida? Will you have country club
a small percentage of your monthly expenses isfees? Or maybe you want to buy an RV and travel.
credit card debt. Make a concerted effort to pay offAll these lifestyle choices come with dollar signs and
your credit card balances. Then chop up those cardsassessing them is easy once you understand some
and never look back. Paying cash for merchandise isbasics. For now, just remember that your current
a wonderful feeling. You want to feel rich? Pay cashmonthly expenses is the key to unlock the question
for a car -- you will feel rich. Even if you dismiss myof how much money you need to retire.
advice and keep credit cards handy, make a budget