Three Ways to Tell If You're Financially Healthy

Your retirement savings, your debt and your emergency fund. Here's why

by Anna Williams • LearnVest.com
money checklist image
Photograph: Mmaxer/Shutterstock.com

But you should have a rough estimate to guide your savings. To predict how much you should aim to save in total, you can start by using a free retirement calculator.

All you need to provide is your birthday, the age you plan to retire (67 is standard), your annual pay and how often you receive a paycheck to see how much money you’ll need each month during retirement. Multiply that figure by 12 to see how much you’ll need for a year, then by about 23 to get an idea of how much you’ll need in the long term.

Now that you have that number with all the zeroes … don’t panic! We have you covered, and there are a few things to keep in mind:

First, the calculator assumes a “replacement ratio” of 85%—the estimated amount of your current income that you’ll need to have available during retirement. For most people, Kirkpatrick recommends replacing 85% of your current household pre-tax income at a minimum, but not everyone will need 85% exactly—check out our guide to estimating how much you’ll need to live the retired lifestyle you want.

Second, remember the secret of investing: $500 in your retirement account today could equal as much as $21,000 in 20 years. And the earlier you start, the more time your money has to grow. Even if you can only sock away $100 a month, you can make it count by starting today.

Read the rest on Learnvest.com.

Related:
Do You Need a Retirement Planner? 5 Times You Might

7 Steps to Help You Have More Money This Year

Next: 40 Financial Things You Should Know by Age 40

Want more of MORE? Sign up for our weekly newsletter here!

Try MORE on your iPad—for FREE!

Share Your Thoughts!

Comments

Post new comment

Click to add a comment