While there are many retirement planning options available in the market today, many people find it quite difficult to get started. More then selecting the investment product, they are confused on the amount to start with, and the amount they would require during retirement ages.

Risk Exposure

The type of product you would invest in depends on the amount of risk you would like to be exposed to. During retirement, we don’t really have many sources of income. Hence, if you lose money on a risky investment, you would be left with nothing. If you, however, have millions in you checking account, you don’t have to bother much about the risk factor, not even about retirement. So, the type of retirement investment portfolio you must design, should depend on you risk taking ability.

Happy Life

Most people want to have a happy life after retirement from job. How much does it require to lead a happy life? Well, this depends on how you define happy. For some, happy means driving a BMW, and for others, it just means spending time with family. Decide what you would require to be happy.

Life Expectancy

We don’t really know how many years we would live after retirement, yet we will have to assume a figure in order to get started with retirement investment portfolio planning. If you assume you would live 30 years after retirement, you will have to plan accordingly.

Life Style

The retirement investment amount, to much extent, depends on how you would like to live your life after retirement. If you expenses are too high, you will need a bigger amount. If it’s low, you will need less. So, think about the lifestyle you intend to live before planning the amount.

The Actual Calculation

Say you intend to retire by 60 and you would like to live for 20 years after retirement, and the amount of funds you require to meet your expenses is $30,000 per year, then the total amount to live your retirement age would be $30,000 x 20 = $600,000. That sounds to be a very big amount. You don’t, however, have to accumulate it in a day or a year. If you are around 30 years old, you have another 30 years to save your $600,000 retirement amount.

So, the amount to be saved per year would be $600,000 / 30 = $20,000, which is approximately $1,666 every month, not a big amount. You investment amount would definitely grow due to compounding, and you expenses would also increases due to inflation. We haven’t, however, taken these aspects into consideration as they would make the calculation quite intricate.

Investment Options

Investment options are many. Select the ones that suits your needs and risk taking ability. For safe investment one can choose products like savings account, IRA, gold, 401k, etc. For a bit risky but high yielding ones, you can select mutual funds, stocks, etc.