As Chris Hogan from Dave Ramsey’s team puts it, “Retirement isn’t an age. It’s a financial number.”
We often think about retirement as a magic age that we’ll reach someday, kick our feet up and relax. Not true. You have to give some thought to planning for the future and what it’s going to take each month to get there.
Then, with steady plodding (Proverbs 21:5), focus and determination, you’ll reach “the” number you need sooner or later depending on your individual goals.
My approach to saving for retirement hasn’t been scientific. My dad told me when I first got a job after college to start contributing some amount, even if small, to my retirement. So, I did. I saved consistently for years. It wasn’t always a lot but it was typically at least 5%.
That savings has helped position our family well for the future, but I haven’t really given much thought to my retirement age or what we need to be contributing each month to meet our future needs. I’ve just blindly saved and did so consistently.
I recently decided to sign up for Chris Hogan’s free Retire Inspired Quotient (R:IQ) and find out my monthly financial number for retirement. The R:IQ tool asks a few questions and ultimately lets you know what you need to be putting back every month in your budget, or before tax (401K, etc.) to hit your retirement goal.
Here are the simple questions you can expect:
- Pick a choice that describes your retirement lifestyle (Recreation, family, etc.)
- Annual income
- If you were to retire tomorrow, how much do you think you would need each month? I used an estimate in between my current take home pay and gross income
- How many years until you would like to retire?
- How much have you already invested?
Again, the result will tell you how much money you need to be contributing each month to hit your goal by the age in which you want to retire.
You can also create a checklist of action items to plan other aspects of your finances such as creating a will, obtaining life insurance, setting up a budget, etc.
Overall, I found the R:IQ very helpful. I’m pleased to know our family is on track, based on what we’re currently saving each month and because of our early savings.
The other neat aspect of the tool is that you can play with the numbers. Obviously, if we’re willing to reduce our income per month in retirement, we could retire sooner. This could mean we reduce expenses we have today, or choose a lower cost of living option.
Ultimately, it’s up to you to figure out your needs in retirement and this tool is certainly helpful in figuring out that monthly number that can get you there.
What do you think about Chris Hogan’s Retire Inspired Quotient?