How much money do you need to save for retirement to live a normal life?
If you freelance or trade for a living, you don't have to rely on a pension fund to retire.
Unless you independently make payments to the pension fund from your income, but in this case, most likely, the minimum pension will be accrued.
Therefore, it is advisable to ensure a decent old age on your own, through saved money and successful investments.
But first of all, you should calculate how much you need to save for retirement in order to ensure a normal standard of living in old age.
That is, you need to set the amount of monthly expenses after retirement and make all calculations based on this.
Planning an independent retirement
Each person has their own expenses, some live on $500 a month, while others don’t even have $5,000. In many countries, exactly 500 US dollars or 6,000 per year is considered a fairly decent amount.
Therefore, we will focus on this indicator, which you can adjust up or down 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
We can say that if you want to have a pension of 500 US dollars, you need to save 150,000 dollars. As a result, this amount will be enough for you to live for 25 years.
Using the amount received, we calculate how much you need to save per year, taking into account the remaining time until retirement and the income received.
For example, you have 10 years left until retirement age, you already have a deposit of $50,000, which means that in 10 years you need to save another 100,000, putting aside 10,000 per year.
But this is the simplest possible calculation scheme; it can only serve as a guide. For more accurate calculations, one should also take into account the inflation factor, to which even savings in hard currency are subject.
Protecting your retirement savings from risks
To protect savings from possible risks and reduce the impact of inflation, you should take a creative approach to creating pension capital.
Diversification – money should be distributed among different investments. That is, part of the savings is on deposit in a bank, the other is invested in precious metals, and the rest is invested in several types of securities.
Only this approach will preserve savings from depreciation and other risks.
Money must work - you should just keep cash at home, in this case you will lose from inflation, even the dollar depreciates by an average of 2.6% per year. It is necessary to invest the accumulated funds so that the total return rate exceeds 3% per annum.
Therefore, there is nothing else left to do but invest money in assets that generate stable income, such as stocks, bonds, precious metals, and bank deposits in foreign currency.
Recommended brokers for long-term investments:
To invest in securities - https://time-forex.com/vsebrokery/brokery-fondowogo-rynka
For investments in precious metals - https://time-forex.com/vsebrokery/brokery-zoloto-serebro