Comfortably as they want during retirement
Everybody has a different age at which they want to retire at. Everyone has that number that they want to save up and retire on, however preparing for retirement is more complex than that. Preparing for retirement is not easy, it takes a lot of money and planning. However, planning for retirement, which is in the unpredictable future, can hinder how comfortably people live while in retirement. Some of the reasons why people cannot live as comfortably as they want during retirement is because of a lack of money. This can be caused by different factors, including: underestimating the life expectancy, not taking considering inflation, miscalculating needs and thinking it is too late to start saving.
I would like to retire at the age of 65. However, preparing for retirement is difficult, given the capriciousness of the future. I could loose my job or I might make less than planned. I dream of saving about 2 million dollars to retire. This would mean approximately 20 to 25 years worth of salary, dependent on how much I make. To ensure that I can save up what I want for retirement, I must make certain decisions which include: where I work, how long I work there and how much I invest. I plan on attending a college to earn a Baccalaureate in Biochemistry, then attend graduate school to become a Physical Therapist. As a Physical Therapist I could work in a variety of settings, my dream setting being a hospital. Physical Therapists for hospitals tend to make more than those that work at schools and geriatric departments. If I could work at a hospital, I would want to stay at that setting for at least 20 years. As I get closer to retirement, I would invest more and more money into my retirement fund as well as in commodities. These investments I make would be based off of the history of the company, as well as the amount of profits. Those would be my decisions to reach my retirement goal. However, there are many mistakes that could be made.
Estimating life expectancy is perhaps the most important factor when saving for retirement. One study has shown that people live between 11years and 19 years during retirement, however some people prepare for a shorter amount of time. It is always better to overestimate than underestimate. If retirees overestimate, than there is more money to be spent on living luxuriously or to give to their children. Unfortunately, underestimating does not lead to living luxuriously, and can cause more stress on the retiree.
Another mistake made by people planning for retirement, is not considering inflation. Inflation is the decrease in the value of the dollar, caused by an increase in the general price of goods and services. Many workers do get raises to combat the effects of inflation. However, many people who prepare for retirement do not take inflation into account, when they find out how much they need to save to retire. Many people think of a specific amount, like one million dollars, that they need to retire, but it should be a formula that changes dependently on the amount of inflation.