The most important factor in retirement is money. For some of us, this is a great problem. Can we afford to retire? Do we have enough money saved up to live comfortably for the rest of our lives? Here are some factors you need to consider if you are wondering whether you can afford retirement.
Your Current Income
A look at your current income is a good place to begin when considering retirement. According to sources, you need 10 to 16 times your salary saved by the time you hit retirement. Is your current income suitable for this? Of course, this depends on other factors too. For example, if you downsize your home or move to more affordable areas, you may be able to live on much less. So, take this and factors, such as travel expenses and expenses in case of emergency or accident into account before you retire.
Potential Retirement Income
This is how much money you are expecting once you retire. You may have a 401(k), Keogh or IRA accounts to finance your retirement. Then, you may also be getting Social Security and money from stocks and bonds and various other investments and savings. Take all these into account and deduct the expenses that may incur on a day-to-day basis. If you have a significant sum of money left over after these expenses, which will enable you to live comfortably, you are on your way to a comfortable retirement.
Consider your Health
How healthy are you? Talk to your doctor and take a good look at yourself. If you get the green light for a long life span, you are probably going to need more money than you thought you would for your retirement. However, if you have significant health issues, it may be more sensible to retire as soon as you have accumulated an amount of money that enables you to live comfortably. Of course, early retirement can mean more joy to your life and, who knows, your health issues may disappear and you may live for a long time yet!
It is not easy deciding if you can afford retirement. However, you should consider these three factors before you take the plunge. Facing these three factors and planning accordingly will enable you to enjoy retirement more.