Quickly Figure Out Your Retirement Number with This Equation
Saving for retirement is all about figuring out exactly how much money you're going to need when you're older. If you're not really sure where to start, The Simple Dollar has an equation to get you started.
The calculation isn't exactly perfect, but it'll give you a rough estimate of what you'll need to save. You'll need to go through the following:
- Calculate 80% of your current salary.
- Factor in inflation by typing in 1.03(number of years until you retire).
- Multiply #1 by #2. This is what your salary will look like in the future with normal inflation.
- Subtract what you'll receive from Social Security (this is on your Social Security Statement) from the number you got in #3.
- Multiply the final number from #4 by 20. This is the amount of you'll need to save for retirement.
It's a bit complicated, but once you figure it out you'll have a rough estimate of what you need to save for retirement. Head over to The Simple Dollar for a more detailed explanation.
How to Quickly Figure Out Your Retirement "Number"| The Simple DollarPhoto by U.S. Navy Imagery.