How much money do you need to save for retirement to live a normal life?
If you freelance or earn your living through trading, you don't have to rely on a pension fund to retire.
Unless you make payments to the pension fund yourself from your income, but even in this case, the minimum pension will most likely be calculated.
Therefore, it is advisable to ensure a dignified old age for yourself, through savings and successful investments.
But first of all, you should calculate how much you need to put aside for retirement in order to ensure a normal standard of living in old age.
That is, you need to establish the amount of monthly expenses after retirement and make all calculations based on this.
Planning an independent retirement
Every person has their own expenses. Some people live on $500 a month, while others struggle to live on $5,000. In many countries, $500 or $6,000 a year is considered a reasonable amount.
Therefore, we will focus on this indicator, which you can adjust upward or downward in accordance with your needs and capabilities.
At one time, financial consultant Bill Bengen developed a theory according to which after retirement, expenses amount to 4% of the initial capital.
Now it’s easy to calculate the required amount: 6000/4x100 = 150,000 dollars
You could say that if you want a pension of $500, you need to save $150,000. This amount will last you 25 years.
Using the resulting amount, we calculate how much we need to save per year, taking into account the remaining time until retirement and the income we receive.
For example, you have 10 years left until retirement age, you already have a deposit of 50,000 dollars, which means that in 10 years you need to save another 100,000, putting aside 10,000 per year.
But this is a very simple calculation scheme and can only serve as a guide. For more precise calculations, inflation, which even savings in hard currency are subject to, should be taken into account.
Protecting your pension savings from risks
To protect savings from potential risks and reduce the impact of inflation, you should take a creative approach to creating your pension capital.
Diversification – money should be distributed among different investments. That is, part of your savings should be kept in a bank deposit, another part should be invested in precious metals, and the rest should be invested in several types of securities.
Only this approach will allow you to protect your savings from depreciation and other risks.
Money should work – simply keep cash at home. Otherwise, you'll lose money from inflation; even the dollar depreciates by an average of 2.6% per year. You should invest your savings so that the total return exceeds 3% per annum.
Therefore, there is nothing else to do but invest money in assets that generate a stable income, such as stocks, bonds, precious metals, and bank deposits in foreign currency.
Recommended brokers for long-term investments:
For investments in securities - https://time-forex.com/vsebrokery/brokery-fondowogo-rynka
For investments in precious metals - https://time-forex.com/vsebrokery/brokery-zoloto-serebro
