What's Your Retirement Lifespan🐥?
You start by estimating how many years you will live in retirement. Talk about the unknowable, right?🙄 But look at the average life expectancy for someone of your age and gender, plus consider the ages at which your grandparents or parents may have passed away and you may get a sense of your own lifespan. Factor in what age you expect to retire. For example, if you hope to retire at 65 and you think you will live to 85, then you expect to live in retirement for about 20 years. ⠀
You could live on well past 85 or not, but, for now, you have a goal to start with.🏖🏜
What's Your Retirement Salary?💵
The next thing you want to estimate is how much of today's income do you need to live on. ⠀
In retirement, you may be able to cut expenses (by getting the kids raised and hence no more maintenance fees or school fees, downsizing the house, or eliminating debt including the mortgage🏠) and live leaner than you do now, or you may want the same standard of living you currently have.
At a minimum, you should plan on needing 80% of your current income, an even better rule of thumb is 85%. Or you may be set on 100%, shooting for a higher standard of living then 120% and above will hit the mark. Ideally if you find the total sum you need to live off. e.g £50,000 per year and you have an idea of how long you will love for e.g 20 years then you can simply multiply that to give you £1,000,000. Don't forget to take into account the likely effect of inflation on your current savings or on your future income.
If you have this sum saved up or you currently have investments which are performing well then great. You simply need to invest this total sum to give you a return of 5%(£50,000) per year and this will allow you to have money to leave in your inheritance.⛳🏌️♂️