Saving up for retirement can be a daunting task. It’s hard enough trying to figure out how much you need to save, but then you also have to decide where to put that money. Do you open a 401(k)? An IRA? A Roth IRA?
If you’re like most people, you probably have a lot of questions about retirement savings. Here are 5 questions you should ask yourself before you start saving for retirement, according to William Schantz of mafllc.
5 Questions to Ask Yourself
When to Retire
This is probably the most important question you’ll need to answer. When do you want to retire? Do you want to retire as early as possible? Or do you want to work until you’re 70?
Your retirement date will have a big impact on how much money you need to save. The sooner you retire, the more money you’ll need to have saved up.
How Much Money Will You Need in Retirement?
This is a tough question to answer, but it’s an important one. You need to have a general idea of how much money you’ll need in retirement so that you can start saving accordingly.
According to William Schantz, a good rule of thumb is to plan on needing 70% of your current income in retirement. So, if you currently make $50,000 per year, you should plan on needing $35,000 per year in retirement.
Of course, this is just a general guideline. Your actual retirement income needs may be more or less than this depending on your specific circumstances.
What Will Your Expenses Be in Retirement?
This question goes hand-in-hand with the previous one. In order to know how much money you’ll need in retirement, you need to have a good idea of what your expenses will be.
Start by making a list of all your current expenses. Then, think about what those expenses might be in retirement. For example, your mortgage or rent payments may go away if you own your home outright or pay off your mortgage before retirement. But you may have other expenses, such as healthcare costs, that will go up in retirement.
Once you have a good idea of what your expenses will be in retirement, you can start planning how much money you’ll need to cover those costs.
What Is Your Current Savings Situation?
Do you have any money saved for retirement right now? If so, how much? This is important to know because it will impact how much money you need to save going forward.
If you don’t have any money saved for retirement, don’t worry. You’re not alone. But, it’s important to start saving as soon as possible so that you can catch up.
How Much Should You Be Saving for Retirement?
This is also a difficult question, but there are some general guidelines that William Schantz suggests you should follow. If you’re just getting started with saving for retirement, you should aim to save 10% of your income. If you can save more than that, great. But, 10% is a good starting point. If you’re closer to retirement and haven’t saved much yet, you’ll need to save more than 10%. Try to aim for at least 15% of your income.
Of course, these are just general guidelines. The actual amount you should save will depend on your specific circumstances.
Saving for retirement can be a daunting task, but, it’s important to start planning for retirement now so that you can enjoy a comfortable retirement later. Be sure to ask yourself the five questions that William Schantz has listed above. Answering them will help you develop a retirement savings plan that’s right for you.