Today, people are starting to retire earlier and earlier. When is it a good time to start thinking about retirement? How much super do you need to retire?
You will need enough money to allow you to live comfortably for the rest of your days. How do you calculate this? Well it will depend on a few factors.
How comfortable do you want to be? Do you want to stay at home with your wife watching Netflix and gardening or would you rather go travelling multiple times each year? Do you want to own a vacation home? Do you want to have expensive hobbies? You will need to take all that into consideration in order to figure out how much money you will need every month.
How long do you expect to live? Medicine is improving every day. Just because the average life expectancy is 78.64 years for the average American (80.93 for Canadians, 80.75 for the Brits, and 81.85 for our Australian friends), does not mean that you can plan on dying at that specific age. Life expectancy is heavily influenced by young people who have met unfortunate ends due to disease, accidents, and violence. Count on living a few decades beyond the average life expectancy, maybe more!
Can you count on any social benefits? Many countries have social retirement programs. These often won’t let you live a life of luxury, but they could help pay some of your bills. It is important to take this extra money into account, but it is also important to not plan you life around them as your country’s political client may affect things.
What about your retirement accounts and investments? The most important of all. If you manage your finances well, you will be able to live the life you want to well into old age. Be sure to set-up retirement accounts right away and take advantage of any tax benefits or investment-matching your company may offer. Investing a little now can make a big difference down the line.
Career, Hobbies, and Friends
One question you really need to ask yourself is, When do you think you will be ready to retire and not work any more? For some, the answer is immediately. Others will never be able to give up their job. Neither option is bad. You just need to choose which is right for you.
Picking up a couple of hobbies is really a necessity. You will not want to be retired and have nothing to do. Be sure to think a little about what you want to do based on the age you plan on retiring at. Maybe golf will be your thing, maybe it will be skydiving.
You may have a different group of friends when you retire. Thinking about your current friends and what kinds of friends you want to have is really important. If you retire at 30, many of your friends will still have full-time jobs and it will be difficult to see them often. It is good to keep this in mind even if you have enough money to retire early.
No matter when you choose to retire, it is always best to plan ahead. Planning ahead will lead to you having a more comfortable life and being able to do more, and at worst, it will give you more options. So start thinking about it!