Retirement is one of the biggest concerns on the mind of an average American. We all want to retire with a huge nest egg that can suffice for as long as we live after retirement. The sad news is most people don’t have any idea of how big a nest egg they will need. You can use a calculator to determine the size of the nest egg you will need, you must first understand why it is important to know why a bigger nest egg is extremely crucial for the future.
Previously, it was believed that a one million nest egg is enough to guarantee a luxurious retirement. Today, however, one million isn’t even enough to buy you a luxurious house in your favorite coastal city. It may be enough for a frugal retirement, but again it depends on how long you live after your retirement. A recent survey points out that Americans are now outliving their retirement nest egg. Of course you cannot bring down the inflation rate. So, the best thing to do is increase the size of the nest egg.
Here are some of the tips our expert deem highly useful to ensure a large nest egg and more secure post retirement life regardless of how long you live.
Start Early Savings
One smart way to save more is to start earlier. The more time you have, the more your money will grow and so will the nest egg. Moreover, starting earlier also means your yearly saving contribution will be lesser and you will have more money to spend every month. For instance, in the current scenario, you require around seven thousand a month in order to have a 1 million worth of nest egg after 30 years. Yet, if you would have started ten years earlier, the yearly contribution would have been around three thousand.
Maximize Your Saving
The above mentioned plan will help you save one million in forty year, but as we have already discussed, one million is no longer an amount that will guarantee a dream retirement. So, it you need a nest egg big enough to contain that dream, you need to maximize your saving as well. Now picture the example shared above and imagine how much you can save if you contribute seven thousand for forty years?
Get Rid of Expenses
No matter how big of a nest egg you retire with, there are factors that can shrink its size over a period of time. While it may only sound natural, there are many ways it can, and should, be avoided. Most important thing to do is to get rid of bigger expenses before retirement. These expenses include mortgages and car payments. Make sure you have planned your retirement according to your mortgage payoff.
Most people consider 65 as an appropriate age for retirement. We say, there is no point of retiring that early if you are healthy enough to continue. By the age of 65, you will be free of most responsibilities such as kids, mortgages and car payments. That is why you will be able to save more in less time.
Use retirement calculators on our website to calculate the size of your retirement nest egg.