How much interest you pay on your mortgage is one of those things people never really think about, sure they think about what the interest rate is but they never look at how much interest will they pay over the term of the loan.
Another financial metric people also never really look at is how much money will they need for retirement.
Now this is another one of those scary numbers that, unfortunately putting your head in the sand and ignoring, won’t go away. Most people though have never had a look at just how much money one needs to generate the income they want in retirement even though it is a reasonably easy number to work out.
How to work out how much you need.
If you would like $100,000 in today’s dollars it is a reasonably easy formula to work out how much you need, for example if you were to put your money into a term deposit today you would receive around 4% in interest which means if you want to work out how much of a nest egg you need to generate that income you simply divide $100,000 by 4% which equals $2,500,000.
So if you have $2,500,000 today and you would like to retire on $100,000 per annum you could simply place those funds into a term deposit earning 4% and hey presto you are all set……..or are you? Yep, we didn’t allow for inflation and the increasing cost of living but you get the basic idea.
We also didn’t allow for the fact that many of us are years away from retirement and so we would firstly need to work out what $100,000 per annum will be when we retire and once we have calculated the nest egg we need in retirement we also then need to work out how much money we have to save or invest so that we can accumulate that nest egg.
We have made it a little easier to work all of that our for you, it’s not perfect but it gives you a pretty good indication of how much you will need to save each week to reach the amount of income you would like in retirement. To get a better understanding of how much you need to invest each week simply drop us a line after you have played a little bit with the How Much Do I Need To Save calculator.