Setting clear retirement goals is the foundation of any successful financial plan. In this post, I'll share how I calculated my retirement number and what I need to save each month to reach my goals.
Understanding My Retirement Needs
The first step in my retirement planning journey was to determine how much money I'll need to live comfortably in retirement. I started by estimating my annual expenses in retirement, considering factors like:
- Housing costs (mortgage or rent, property taxes, maintenance)
- Healthcare expenses
- Food and groceries
- Transportation
- Utilities and other bills
- Travel and leisure activities
- Miscellaneous expenses
Calculating My Retirement Number
Using the 4% rule as a starting point, I calculated that I need approximately 25 times my annual expenses saved for retirement. This would allow me to withdraw 4% each year while maintaining my principal.
My Monthly Savings Plan
Based on my retirement number and timeline, I've established a monthly savings target. I'm automating this amount to go directly into my investment accounts.
Conclusion
Setting clear retirement goals has given me a roadmap for my financial future. By understanding my retirement needs, calculating my retirement number, and establishing a monthly savings plan, I've taken control of my financial destiny.