How To Save For Retirement - The Easy Way!
If you have problems saving for retirement this calculator offers an easy solution - periodic spending. Small, regular payments like your daily fancy coffee at Starbucks, the storage locker fee to hold your junk, and the magazines you don't read can all fund a secure retirement. Try it yourself and see!
For example, just input $5 daily for coffee at 10% interest for 40 years. You'll be shocked. Now try 12% - but make sure you are sitting down first. To complete the exercise simply examine all unnecessary periodic spending in your life, plug these expenses into the calculator using your expected remaining lifetime (assume age 100 or 90) as the number of years, add up the totals, and you will discover the simplest, most certain way to save for retirement.
The wake up call this calculator teaches is the true cost of spending is the compounded interest you lost over many years - not the actual money you spent. That is the key principle.
A few things to keep in mind:
Finally, if this calculator helped you then please give a like, tweet, or +1 to support our educational efforts. Thanks for helping out!
How To Save For Retirement – Tips
The paternalistic days of retirement planning are dead.
You can’t rely on a company pension or government plan (like Social Security) to take care of you in retirement like your father or grandfather did. The game has changed to self-funding through 401(k)s, IRAs, and personal savings.
You are now solely responsible for your retirement security. Companies and governments have passed the baton to you. Are you ready? Do you know how to save for retirement? Are you you taking the right actions?
The truth is saving for retirement is a lifelong process when it is done right. The earlier you can contribute to your retirement, the more time it has to compound and grow.
But all is not lost if you haven’t begun yet. This quick guide will show you how to save for retirement the easy way and get back on track.
Quit Worrying And Start Planning
For some people, saving for retirement seems an impossible task. The goal is so large it seems insurmountable.
Fortunately, it really isn’t that hard. It all boils down to habits. Every day you make tens or hundreds of financial decisions that either result in savings… or not. Your daily spending habits will literally make or break your retirement security.
So don’t worry about the big numbers. Focus on the small numbers you can actually understand – your daily spending habits. Those small, daily amounts – give sufficient time – will compound and grow into those impossibly large figures that are required by the retirement calculators.
Focus on what you can understand (daily spending) and forget about the part you don’t understand. That is what this calculator helps you do.
How Much Should I Save For Retirement?
Some financial experts suggest saving at least 10%-20% of your income to fund your retirement account. This is just a general rule of thumb. The truth is it really depends on how early you started building your retirement savings and how long you have until retirement.
Rather than use a blind rule of thumb, try preparing a budget showing where your money is going and where you can afford to make cuts without hurting lifestyle. Focus on the big expenses since this is where the most money can be saved, and then focus on periodic spending because those regular costs really add up.
The advantage of this simple retirement savings calculator is it shows you how easy it can be to build a substantial net worth by reducing your periodic spending so you can allocate your extra money to your retirement savings.
The Easiest Way To Save For Retirement
When saving for retirement, there are lots of things that are beyond our control – rising commodity prices, stock market returns, falling interest rates, or the yearly increases in Social Security payments. The one thing you can control, however, is your periodic spending.
The Key Principle is Forgone Interest – Not Savings
It’s easy to dismiss all these savings strategies as meaningless. They seem like such small dollars in the whole scheme of things. That is a mistake because it means you are looking at the wrong thing.
It is not how much money you save, but the interest on that money that really matters. The compound interest on those small savings that accumulate over many years is what creates a secure retirement.
It is not the $5 here or the $5 there that matters. It is how the $5 grows to become $100 over a period of years and then $1,000. It’s the forgone interest that matters.
If you aren’t clear then just try this retirement calculator for yourself and prove it. The math doesn’t lie.
How To Save For Retirement – Terms and Definitions:
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