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This Acclaimed Financial Journalist Says One Simple Move Could Make Retirement in America ‘Less Scary’
This Acclaimed Financial Journalist Says One Simple Move Could Make Retirement in America ‘Less Scary’
Retirement is a lot like your car’s rearview mirror: Objects are closer than they appear.
Suddenly, Ron Lieber realized that, as a 50-year-old columnist, he’s not far from 65 — and he needed to start planning the end of his working life now.
The New York Times “Your Money” finance writer probably thinks more about retirement than the average person, based on the nature of his work — but he didn’t yet know how much money he needed to ensure he could kick back and relax . secure retirement.
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“It’s easy to get carried away with the math before you know what you want from this stage of life,” Lieber wrote in a recent NYT. column.
So he decided to find out: “I wrote a retirement mission statement – a list of first principles to guide my decisions.”
Lieber believes this is the way to find your own “magic number” you need in retirement.
Here are questions you can ask yourself to help craft your own retirement mission statement — and start saving for your golden years now.
Where do you want to live?
Lieber and his wife, Pulitzer Prize-winning journalist Jodi Kantor, accept being short-term renters rather than owning a home or staying in their current one.
Instead, Lieber said he wants to live “somewhere beautiful, close enough to my kids that I can help them often.”
Living near adult children – and possibly grandchildren – is something many retirees want to do. However, you need to consider how much your cost of living might increase if you move to a house in a new city.
Lieber currently lives in Brooklyn, according to his website. He doesn’t say where his children live, but if they live outside of New York, Lieber will likely end up saving money.
The average rent in New York is currently $3,392, according to a recent analysis by Zillow’s ConsumerAffairs rental data. To avoid paying more than 30% of her income on housing (which is the general rule), ConsumerAffairs data suggests that Lieber would need $135,713 per year to pay her rent.
This is the highest annual income required for renters in the US. So Lieber may have luck trading his current home for a rented one in a cheaper city.
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Wherever he is, he can use current average rents to create an approximate amount of how much money he will need to pay in rent each year.
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What do you want to do?
Lieber does not want to continue working after retirement. Instead, he wants to read, play the piano, cook for his wife, run slowly, and serve those around him.
The good part about these activities is that most of them don’t cost a lot of money. The downside is that none of them generate additional income.
Therefore, Lieber will need to ensure he has the majority of his retirement fund saved by age 65. Although he doesn’t need to have everything saved by then – he can still count on investments It is Social Security – your foundation must be solid.
This is where math needs to come into play for Lieber – and for you. You can use the “rule of multiplication by 25” to figure out how much savings you need by 65. Think about how much money you’d like to live on annually in retirement and multiply by 25. That’s your magic number.
For example, if you want to live on $60,000 a year for the next 25 years, you’ll need to save $1.5 million.
Again, you don’t need to have all of this money saved by your 65th birthday, but a good portion of it would go a long way toward reaching that goal.
You can also trust the power of compound interestas well as a small portion of Social Security Paymentsto cover the rest.
What do you need help with?
Lieber titled his column about his retirement mission statement “How to Make Retirement Less Scary.”
The scariest parts of retirement are often financial, but they are also health-related. It’s inevitable that your body – and possibly your mind – will wear out. As Lieber pointed out in his third and final question about the mission statement: you will need help – and it will cost money.
Lieber believes she may need a caregiver at home later in life. A Place for Mom, a caregiver company, he said which averages $30 per hour for a 24/7 in-home caregiver, totaling more than $20,000 per month.
You may not need 24-hour care, but even with a caregiver who pays $30 an hour a few times a week, you’ll end up spending at least a few hundred dollars a month.
Long-term care insurance It’s a way to start saving for it. It can help you save for retirement and your healthcare needs without burdening your adult children—something Lieber himself desperately wants to avoid.
Overall, Lieber’s reform mission statements are more of a guiding light than an inflexible budget.
“These statements may seem basic, but I will refer to them whenever I have to make a decision about money,” he said.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.