Who cares about retirement? You just want to carry on a comfortable life, right?
Anyway, how do you know how much you need to call it quits? The simple calculation below will change the way you look at what you are doing. Are you ready?
Simple! What is your monthly income now? Thats how much you need to use, at the very least when you call it quits!
It was during my holidays in Bali, I was waiting with my good friend, Edmund, for our flight. Over a cup of coffee Edmund asked me, "Denver, you are successful in corporate now, can I ask you a question?"Do you have a retirement plan?
I returned a ridicule smile and said "what do you mean retirement plan? I am only 27 years old?"
Well, do you know how much you need to retire?
Edmund gave me a simple way to determine this...
He said what is your current monthly income? When you quit, do you know that you will need at least that amount, if not more? Lets also assume that you retire at 60 years old and lived on for 20 years. How much would that be?
$4,000 x 12 (months) X 20 (years) = $960,000
That's close to a million!!
I was astonished! I have never thought of myself as a millionaire.
Then Edmund hit under the belt... he said, "So currently, how many percent of this do you have in your savings?"
I was embrassed to reply, because as a young man, I spent almost every dollar I had going for parties, dinners etc.
Edmund asked, "How do you intend to have that amount?"
I pondered for a long long time.... Then I boldly exclaimed.... "The only way for me is to save $1000 every month!"
Edmund said "Thats a good start, lets see if it is a good plan..."
I was 27 years old. So, I would have 33 years remaining.
$1000 x 12 (months) x 33 (years) = $396,000What?? work for the next 33 years yet not having enough to live comfortably there after??
Not having any other options, I tried that for a 1 year. Do you know how difficult it is to save 25% of your income every month?Extremely! After one year of trying, it dawned on me. Hey, If I just worked on how much I can save, there is a limit. What about if I focused on my income?
I thought about getting promoted again, or changing jobs... I figured, it is not going to help much.
I realised that the solution is really starting my own business.