HOW MUCH WILL YOU NEED?

A Quick Calculator 

In considering how much you need to save for retirement, there are a few things to be considered: 

·         Current living expenses. Some use 80 percent of current living expenses as an estimate for retirement because the number of dependents may decrease. The estimate may need to reflect improved lifestyle over time.

·         Retirement income.

·         National insurance plans.

·         Individual pension plan income from your current pension policies.

·         Company pension plan income.

·         Other income (e.g. rental property etc.)

·         Expected years in retirement. It is better to assume a longer period in retirement. From age 65 to 90, you need to cover 25 years

·         Expected average rate of return on investments and the average rate of inflation.

 

RETIREMENT CALCULATOR​​* (US DOLLARS)​​
​Current living Expenses (monthly)​ ​$10,000
A. Estimated Living Expenses at Retirement (80%)​​ ​​$8,000
Estimated Retirement Income (monthly)​​
1) National Insurance​​ ​$2,035
2) Individual Pension plan​ ​$1,700
3) Company Pension plan​ ​​$2,000
​4) Other Income (rental income or current liabilities)​ ​​0
B. Total Estimated Income​​ ​​$5,735
Retirement shortfall (A-B)​​ ​​$2,265
Expected Years in retirement​​ ​​25
Expected Average Rate of Return from Investments​​ ​​7%
Average Rate of Inflation​​ ​​3%
Net Inflation Adjusted Rate of Return​ ​4%
Retirement Goal​ ​$425,000
​Current Age​ ​​24
Monthly Savings Requirement​​ ​$355
   

*Assumes that retirement age is 65 and that retirement expenditures will be 80 percent of current expenditure. 

To make up for a retirement shortfall of US$2,265 per month needed for 25 years, with an expected average rate of return of sevenpercent and inflation at three percent, will require saving a minimum of US$355 from as early as age 24. At age 40 that monthly saving requirement becomes US$850 a month. This is a hypothetical calculation only. Please speak to your Sagicor Advisor about retirement calculations based on your needs and circumstances.