There is no magic number or a right answer to the seemingly significant question of how much money one requires to retire in peace. The amount differs from people to people, in accordance with their needs, lifestyles, post-retirement plans, and possibility of unprecedented events.
However, one factor that remains crucial, despite the income-bracket you belong to or your way of living, is the level of security you are comfortable with. Therefore, in order to reach your own level of security concerning retirement, following steps are thought of critical importance.
1. Creating an estimated budget of the money you will annually spend during retirement.
2. Having a sustainable income, wherein your retirement options are inflation-adjusted each year, goes a long way in fulfilling your needs during retirement.
3. Freeing yourself of all debts - Eliminating your debts, mortgage payments, car installments, and student loans prior to retirement. Thereby, dramatically reducing your income needs.
4. Being aware of the various sources of income available to you, ranging from Social Security, pensions, annuities, income generated from renting your assets, interest or dividend earned on your investments, or Passive Income Opportunities at your disposal.
As advised by financial analysts, it is considered imperative to put aside at least 4 percent of your monthly income as your retirement savings, and raise this figure to a hefty 15 percent as you continue earning. These savings, combined with the existence of an emergency fund, can do wonders for your retirement fund. Furthermore, following the 70-80% rule of thumb could be a good starting point for most people, as having 70-80% of your pre-retirement income is thought considerably apt for retiring.
Although, there is no single number, magic or otherwise, that could accurately predict the exact amount of money you will need for your retirement. However, keeping the above mentioned key points in mind, and being a disciplined saver throughout your working years may very well allow you to achieve your determined level of security and be on the path to stress-free financial freedom when retirement eventually approaches.