How to Calculate Your Retirement Savings Needs

Understanding 401(k) Fees

Planning for retirement goes beyond 401(k) and IRA contributions – it requires thoughtful planning and consideration to properly prepare. In retirement, you will be living off retirement accounts, meaning that you will likely have no other source of income. If this is the case, there are some things to consider in your retirement planning, such as how much you’ll need, when you’ll need it by, and how you will use your funds.

As you age and advance in your career, your income should continue to increase, but how is that helpful today? Read below to learn how to forecast your retirement needs and how you can use today’s money to prepare for a strong financial future.

Budget Considerations

While your spending patterns will ebb and flow throughout your life, that will be especially true as you enter retirement. According to The Balance, while you may have to pay for things like a mortgage, child care, and work attire early in your career, there will be a shift when you retire because you’ll no longer be paying for many of those things. You will, however, pay for increased medical expenses or outsource tasks you may not be able to do easily anymore, such as raking leaves or cleaning out a gutter.

Knowing this, it’s important to plan ahead. Review your budget today to make sure you’re leaving space for retirement savings. Consider costs such as prescriptions and medical care, children or grandchildren’s wedding or higher education, taxes and social security. Combined, these expenses can add up in retirement, especially without a solid nest egg.

Using methods like the 50/30/20 rule or managing a budget via a financial app or printout can help you create benchmarks for savings and spending for the future. You’ll be able to see where you may be overspending or under saving and can make adjustments accordingly. It may also help to meet with a financial advisor to make sure you’re making your savings work for you the best way they can. Together, you can explore options for maximizing contributions.

Doing the Math

If you’re still wondering how much you need to save for retirement, grab a calculator. The Balance has a simple tip: take what you spend annually today, and multiply it by 25. The total is what you will need to have in your retirement accounts to maintain today’s lifestyle.

However, we know that lifestyle and spending patterns change. Because of that, it’s important to use retirement calculators to ensure you’re staying on track. Slavic401(k) offers a retirement planner calculator that will help you plan for retirement. You can input different scenarios for saving, income increases, and annual household income to get a better snapshot of what’s needed.

For a quick overview, Slavic401k also offers a retirement nest egg calculator, which shows you how much it will take to secure a financially stable retirement. Both calculators provide beneficial information for planning and can help you calculate your next steps.

Diversify Investments

Determining your future needs expands beyond a calculator tool. It also includes having a diverse portfolio to ensure to you are making the appropriate investments throughout your life. Having a healthy mix of investments, including conservative and aggressive, can reduce the impact of a declining market, while also providing balance and risk during a positive market trend.

Many employer-sponsored 401(k) plans have mixed portfolio options, but it’s always a good idea to check with your employer or financial advisor to learn more about your portfolio. If yours isn’t mixed, it may be time to diversify. Learn more about getting the most out of your retirement savings, including how to diversify, on the Slavic401k blog.

Saving for retirement doesn’t have to be overwhelming. With the proper calculations, tools, and planning, you can create a solid nest egg for the future. Explore retirement calculators and read the Slavic401k blog to learn more about making, saving, and spending for retirement.

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