Retirement planning applies to every working individual in this country. If you're just starting out in your career, time is on your side. If you're halfway through, then you should be regularly doing a retirement checkup. If you're winding down, hopefully you are adequately prepared to enjoy your golden years.
If you don't think retirement is important, take a look at some of the research reports from the National Institute on Retirement Security. If you don't have time to read each individual report, peruse the executive summary and you will get a good flavor of just how horrible this country is doing on the retirement front. That information will blow your mind!
Without proper retirement planning, that virtually means you have only a few options
- you need to receive an inheritance
- you need to win the lottery
- you will or plan on working forever
- you pass away the day after you decide to retire
Most people will probably frown at options 3 & 4 and many of us won't have the luxury of option 1. Option 2, good luck because the odds are definitely not in your favor. People don't have much saved for retirement because they never set a goal. Plus, we have absolutely no clue how much money we are going to need in retirement.
There are so many variables that you simply can't plan for, but as a starting point, search "retirement calculator" and play around with the numbers. At least that's a start. But just to put things in perspective, let's do some simple math in relation to the amount of money that we're all going to need in retirement. The rule of 219 is not widely discussed but here's how you get the number. The rule assumes:
- you and a spouse/partner/significant other (2 people)
- eat 3 meals/day at $5/meal.
- there are 365 days in a year
- you do this for (20) years.
Thus 2 x 3 x 5 x 365 x 20 = $219,000. Obviously every meal you eat won't be $5, you may not have a spouse in retirement, and you may live longer than 20 years in retirement. This rule clearly makes a ton of assumptions, however it is definitely a bit easier to understand. The alternative, trying to determine your retirement number by conducting a time value of money calculation. Simplicity is the goal of this rule.