How Much SAVING do you need for your RETIREMENT?

" Vision without action is a dream.
Action without vision is a nightmare."

When a person will decide of starting to save. He might ask, How much should I save monthly? How much should an enough savings for my retirement?


How much should an enough savings for my retirement?

Well, there is a formula for that:
Annual Income X 10 = Total Amount of Saving

Example: Let's sayyou have monthly income of Php. 15,000
15,000 x 12 (months) = 180,000 Annual Income
180,000 x 10 = Php. 1,800,000.00

Php.1,800,000 / 1.8 Million is the total amount you must have the moment you retire and you must also invest it that earns 10% rate of return annually.

Why is that so?

1. When you invest the 1.8M in the 10% rate of return investment it will give you 180,000 annually.

Php. 1,800,000 x 10% = 180,000

2. You divide the 180,000 into 12 (months)

Php. 180,000
/ 12
________
15,000

Isn't is the 15,000 is your monthly salary when you're still working? That is what you call LOI or Living in Interest, by the mere interest of your 1.8M that you invest you can support your day to day expenses without asking to your children or bothering relatives or other poeple.

REMEMBER: Be careful of your Php. 1.8M because your supposedly retirement fund will become your own nightmare too, once you put that retirement savings of yours in an illegal investmnet or fly by night business that guarantees you easy and specific high rate of return. There is no such thing as easy and specific high rate of return because every investment and business involves risk. but in the long run ( as in long term of 5years - 10 years) your money will surely grow. And you can't risk your retirement fund that far, maybe your present condition might not handle that risk or retrieve your money in case it's lost.

BE AWARE: too of other people who would like to borrow your money and will promise to pay you. Other people includes your close relatives, even your beloved children. Money loan to other people is very very risky and most of the time no money back guarantee. For Christ's sake it is your retirement fund! It includes your children because by that time you might have gave them their education and having their own job. You've done your responsibility to give them education, so it's their responsibility to save for their own. You can't completely expect your children for your retirement, by that time they also have expenses raising their own family.

How much should my monthly savings?

1. In case your 30 y.o. right now and let's say your retirement age is 60 y.o., so you have 30 years of saving.
60 y.o. = retirement age
- 30 y.o. = age right now
_________
30 = years of saving
( 30 years x 12 mths = 360)

2. From the above example, Php 1.8M
1,800,000
/ 360
__________
5,000 = amount you should save monthly..

So, you must set aside Php. 5,000 each month of your salary for 30 years. 30 years is quite long, yet through investment facility (like Kaiser International) your saving period is shortened ( 5 years ) then let the interest of your money compound until its maturity.

The most secure and safest investment for retirement is Treasury Bills/Notes or Bond Fund. Goverment Securities/Bond fund is a fixed income investment. If you'd save as your retirement fund you may choose to put it in Mutual fund invested in Goverment Securities which is the Bond Fund for as low as Php. 5,000 of initial investment and Php. 1,000 as additional for subsequent investment.