Retirement planning is actually a blend of science and art. Unless you would like to pass your retirement years in penury, you would need to plan a yearly retirement income to see you through after retiring. Here are some of the considerations and estimates that you need to take into account to be able to get a good life after superannuation.
Make your present income a standard
Generally, your present income is a great spot to start with for estimating the income that you will require in retirement. The retirement income that you desire could be a percentage of your present income, which could be 60 – 90% based on your own financial objectives. Your overall income at present takes care of your life’s needs today. Thus, it is practical to use that income or a part of it for your income’s estimation.
Project your own expenses after retirement
Once you obtain a notion of the annual income during retirement, it must be sufficient to cover your entire retirement expenses. It is vital to know your retirement expenses for your retirement planning procedure. Many individuals have trouble in detecting all the expenses and the amount to spend in every area. Remember why such costs are expected to go up over time because of inflation. The average inflation rate is around 3 – 4%, and your purchase power will reduce as a result. You need to hedge yourself for all such downs and ups by having a conservative estimate.
Decide about your time for retirement
Your retirement should not only stop at the estimation of the amount that you need for covering your own retirement costs, and live a comfy life after superannuation. The more the time for your retirement, the higher the retirement funds that you will require. This can partly be based on when you wish to retire and partially on your own longevity. Although nothing is wrong with that in case your own financial circumstance lets you keep in mind that retirement at 50 will surely cost much higher than what it will be at 65.
Gauge you own life expectancy
Your lifespan, along with your age, has a significant role on when you want to retire. If you live long, it will obviously cost you much more. There are risks of living longer than what your retirement income or savings are. Make a conservative estimate about how long you will live based on factors like your family history, health status, gender etc.