This exercise is for teens and older (especially for the adults!).
Today we are going to calculate our magic number.
Go to:
https://www.calculator.net/retirement-calculator.html
You will have to enter:
your current age
your anticipated retirement age
how long you expect to live
your current income
your anticipated passive income
Leave the average investment return and inflation rate as is (6% and 3%, respectively)
If you are young and expect your annual income to increase, you may have to multiply your current income by more than 100%. For example, if you currently earn $4,000/year, but want to have $100,000/year in retirement, your “income needed after retirement” will be 2500%. To find your percentage divide your goal income by your current income and add two zeros (ie: $100,000/$4,000 = 25 = 2500%).
The calculator will give you the savings you need at your retirement age to have the income you want. This is a good baseline for your personal “magic number”.
Remember, you can always change this later as your life unfolds.
Second reminder: all of your assets go into the “savings” number- your house, savings, stocks, bonds, checking account, mutual funds, government-sponsored retirement accounts, etc.
Fun fact: the more you have available as passive income, the less you will have to save to reach your goal.
What number did you come up with? Were you surprised?