Hello,
I have a few money tips I would like to share with you. First and foremost these calculations are for your benefit. Please attempt to do them and you will have an actual number in mind for retirement. Since all of you are following my money watch blog, you are now fully aware how much your current net worth is. The calculations below are all based on current income, future income, and your Net worth. Do your best to estimate what your expenses are and what they will be in the future. If they happen to stay the same or even if they are expected to rise, it’s a rough estimate. Keep that in mind as things may change in the future.
Figures are examples: Enter your numbers to get actual figures for your scenario.
Step 1 -Income to Net Worth %- 50,000 / 60,000= .083 or 83% (The lower the percentage the better)
Step 2 -Savings to Income % – 300 / 1500 = 20% (The higher the better)
40,000 / .04= 1,000,000
Step 3 -Retirement Expenses/Income Estimate- 50,000 / .04= 1,250,000 (This is the figure you have to accumulate to have 50K a year in income to live off of)
60,000 / .04= 1,500,000 (For every increase or decrease in 10,000 dollars a year you will need 250 thousand of assets in retirement)
After completing all the calculations in every step you will understand what you must improve on based on the financial figures. If you’re net worth calculation in step one is over 1 that just means your income is greater than your net worth. Thus you have to work on getting the percentage below one. This will get you one step closer to reaching the retirement number in step three. I found these cool calculations by reading various financial articles/blogs and I have benefited from these calculations as I hope you will too. Every six months to a year run these again to see if you have improved.
By knowing where we are, we all can definitely see what is needed to accomplish our financial dreams!
As always do not forget to watch your money!
RichUncle El
