Save early and save often. We’ve heard this. Compound interest and time are our greatest attribute.
But how much should we actually save? Well, this depends on your lifestyle goal.
For instance, an individual who’s in their early 30s could save $12,000 per year (or $1,000 per month) and have $1.1 Million at retirement. Will $1.1 be enough in 30 years? Assuming inflation is 3% per year, then $1.1 Million will really only be worth $600,000 in today’s dollars.
So this begs the question, is $600,000 enough?
Well, assuming you earn a moderate rate of return and inflation is 3%, this would give you a lifestyle of approximately $30,000 per year in retirement. Now, that may work for some, but others may want a similar lifestyle to what they spend now, or maybe even more luxurious retirement.
Determining your savings strategy starts with your goal. Retirement, college planning, and saving for a new home are a few of the most common savings goals.
Call to schedule a time to discuss your savings plan with us. We will help create a realistic savings plan and be there to ensure that we make the necessary changes along the way. Say inflation increases to 5%, or college expenses increase, adjustments will need to be made to your savings plan.
It’s easy to put this stuff off. Start budgeting and saving early. Your self in retirement will be thanking you for doing this.
Call today to start your financial planning journey! 817-238-6300
Matt Ward, CFP®