comfortable retirement

 

comfortable retirement

how much money do you need to retire comfortably

how much pension do i need to live comfortably Planning for retirement is a critical aspect of personal finance, and determining the amount needed in your pension pot to live comfortably during your golden years is a key aspect. However, knowing precisely how much you may need to live a stress-free and financially secure retirement is often a complex task. From your daily living expenses to healthcare, travel, and mortgages, there are several factors that come into play. In this blog post, we aim to shed light on how much pension you may need to lead a comfortable post-retirement life.

If you've been meticulous about saving and find yourself sitting on a $1.5 million nest egg as you approach retirement, you might be wondering if this hefty sum is enough to ensure a carefree retirement. The question of whether or not you can comfortably retire with 1.5 million dollars is not straightforward and will significantly depend on your individual lifestyle choices, projected expenses, and the overall economic climate. Join us as we dive into the factors that determine just how comfortably you can retire with $1.5 million.

On average, the French saved 18.7% of their gross income in 2021. This percentage is particularly high if we look at the last 30 years and for good reason: the lockdown has boosted the economies of the population. In the longer term, the average savings rate is between 13 and 15% of gross income per household.

For a household that earned 30,000 euros net in 2021, it is therefore about 467 euros that have been set aside each month. Several options are available to grow this capital: the Livret A (whose rate has been set at 3% net over the next 18 months), life insurance, the securities account, etc. Depending on the risk profile of each investor, the potential return will be higher or lower.

Performance Risk

If the Livret A is known to be a risk-free investment (and guaranteed by the State), the equity market offers interesting long-term opportunities. For example, the CAC40 index (which represents the 40 largest French market capitalizations) has generated an average return of 7.76% since its creation in 1988.

Of course, past performance is no guarantee of future performance, but it remains a long-term trend. One thing is certain: the earlier you start saving, the higher the amount of long-term savings will be.

Of course, past performance is no guarantee of future performance, but it remains a long-term trend. One thing is certain: the earlier you start saving, the higher the amount of long-term savings will be.

For example, if you are 40 years away from retirement, with a rate of return of around 6%, you will have to save 522 euros per month to be a millionaire. If you are only 30 years away from retirement, you will have to save 1,021 euros each month to have a million euros at that time. If you are 20 years away from retirement, you will have to invest 2,195 euros per month to achieve this goal – always with 6% expected return.

On the same principle, by investing in an ETF that represents the MSCI World Index, you would have to invest 167 euros for 44 years to become a millionaire. Nicolas Chéron, recognized financial expert, gives 3 relevant tips: start as soon as possible, start with what you have (even if you are young and do not have much to save) and take advantage of compound interest.

Naturally, this is only a matter of theory. The different levels of salaries do not all allow to have this rigor of savings and the money set aside is also used to finance the studies of the children, go on vacation or face hazards. Either way, it's best to plan ahead as soon as possible and save as soon as the opportunity arises.