How Much Do I Need To Save To Retire By 55?

Everybody is looking forward to life after retirement. After all, a lifetime of hard work deserves a good reward, doesn’t it? Of course, everybody would want to retire from work as soon as possible, in order to enjoy the more precious things in life. So, how might one do that?

Money Computations

First, we need to properly calculate the amount that we need to realistically achieve in order to embark on an early retirement at the ripe age of 55. Let’s be honest – you need to appropriate the right amount of funds to your savings in order to make this happen. Otherwise, you’ll just have to go back to work!

Now, let’s get down to the math!

You need to assign an allotted amount of expenditure per paycheck each year. Let’s just say that you spend around $50,000 on average per year. Intuitively, you will need to have this much put aside each year after you retire. The good news is, assuming you resume your current lifestyle and have no additional income from the government or social services, this should be an easy task to set aside, especially if your place of employment set aside a 401K or Roth IRA for you upon hire.

Savings and Income

Since the traditional age of retirement is 65, given that most people start to receive their monetary benefits at this point, it is important to have a large stash of savings that will allow you to live comfortably for at least a decade after retiring at 55. Approximately, you will need at least 15 times your previous average yearly expenditures in order to account for unexpected events within the decade. So for the average amount of $50,000 per year, you should have $750,000 in your bank account.

Of course, you will eventually receive the support from institutions you have invested in, like the social services, so the amount will decrease eventually. These things mentioned above are under a lot of simplified assumptions that are then compared to real-life situations. However, given this, it is important to future-proof your finances if you want to speed up your retirement period. What plans do you have for your retirement? If you’re struggling for ideas, be sure to check out our previous blog here! (LINK)

Are you having a hard time racking your brain to figure this all out? We can help you! Contact us here.