Retirement – a phase of your life when you’re scared and stressed. You’re stressed out about not being able to cover the daily household and medical expenses when there’s no source of income. Most people start stressing about their retirement long before it’s time to retire, but only a few do something about it.
According to a survey conducted by National Institute on Retirement Security, 21% of Americans don’t save for retirement at all, and 75% of people who do save fall short on their savings target. You must start planning for your retirement from an early age. The more you’ve got saved, the less stressed you’ll feel as you near retirement. If you save right, you might even be able to retire early.
If you’re someone who wishes to retire early, you need to start saving early and aggressively. Early retirement means you’ll have lesser time to save enough to enjoy a stress-free post-retirement time.
The question is – how much should you save each month if you want to retire early?
How Much Should You Save Each Month?
Ideally – you should save as much as you possibly can each month if you wish to retire early. However, that’s not always the most viable option.
The rule of thumb for saving right for your retirement is to set aside 15% of your total income every month for your retirement savings. While it may not be possible for you to set that much every month, trust us when we say – it’ll be worth it. Taking out 15% of your monthly income means you might struggle with the current expenses in hand. You might not be able to take the trip that you planned for the month, or maybe, you’ll have to drop your plans for buying yourself something you had been planning for a while. We don’t suggest you suppress all your desires and wishes to save for your retirement. All we’re suggesting is to try not to go overboard with accessory expenses.
Saving 15% of your income is not a hard-and-fast rule. Depending on how much you can spare each month and how early you plan to retire, you can save less or more. However, if you keep yourself bound to a limit, you’re more likely to pull your early retirement plans off!
When Should You Start Saving for Retirement?
This is a very important factor when saving for your retirement. Let’s say you realized you’ve got to save for retirement at the age of 35, and you plan to retire at the age of 50. This leaves you with only 15 years to save for your retirement. If you want to have sufficient savings in hand by the time you retire, you’ll have to set aside more than 15% of your monthly income. The more aggressively you save, the sooner you’ll be able to retire.
However, if you start saving early, let’s say, at the age of 25, you’ll be able to retire much sooner without having to save aggressively. As it’s said, slow and steady win the race – the same is the case with retirement savings. The sooner you start, the lesser of your income you’ll have to set aside. We would suggest you stick to 15% so that you can enjoy a stress-free – even a luxurious, post-retirement phase!