When You Retire...

When you retire, how much money do you need to have saved?
If there is a million dollar question, or a $4 million, or $10 million, I guess this would be it.  In my personal finance class, a student asked how much money you will need to retire.  We started going through the time value of money equations -present value and future values of lump sums and annuities to calculate how much one would need; which started me thinking long and hard about this questions.  I told my students it was keeping me up at night and this is why it is such a hard question to answer:
1. It depends on when you want to retire.  I asked my class and it ranged from age 45 to never retiring.  The person who retires at age 45 will need a lot more money saved in retirement than the person who never wants to quit working.  I’ve always said, “If you can turn your passions into profit, you never have to work a day in your life.”  I also believe that meaningful work provides you with self worth and increased happiness. So if you love your job, maybe you won’t retire; you may just slow down a little.
2. It depends on your lifestyle when you retire.  Experts are saying that you will need 80%-100% of your current income in retirement.  BUT….do you want to cruise the seven seas and stay a five star resorts or do you want to work around the house and live off the land?  There are a lot of retirement calculators on the Internet where you can find out how much money you will need to replace your current income or a percentage of it.  Lately we have been trying to live off the land and it is amazing how much we have saved in groceries.  Even with a small garden and a few chickens, you can save big money, eat better and be closer to your food source.
3. What will Social Security and health care cost be in the future?  I don’t know what government plans will be around when I retire, so I’m planning on being self-sufficient.  I would rather have too much in retirement savings then not enough.
Just some figures so you can check to see where you stand with the average American.  According to Gallup’s annual Economy and Personal Finance survey, the average American expect to retire at age 61.  This is up from age 57 when the survey was conducted in 1991. However over fifty percent of the non-retirees age 58-64 expect to retire past the age of 65.  Gallup also found that 61% of Americans are worried or very worried about having enough money for retirement.  The highest percentage of Americans worried about retirement savings is ages 50-64.
This delay in retirement could be due to a change in values, lack of financial resources, uncertainty about future expenses, or decreased mandatory retirement age.  I hope that you find your passions and can turn it into profit. Let us know what you think. 
When do you plan on retiring and how do you envision your retirement lifestyle? 

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