If someone were to ask you how much money you need to retire, what would your number be? Financial Freedom or Retirement has always been my goal ever since I started this blog. I wanted to be financially free by 40. I continue to read personal finance blogs and books to bring me closer to my GOAL.
Although I already set a due date for my goal, I haven't established an exact amount for my goal. The first amount I set was ridiculously high. It was almost impossible for me to formulate a plan to achieve this goal to establish a realistic retirement amount. I did some research and eventually found a way to develop a sensible retirement amount.
For my goal to be as realistic as possible, I needed to take into account factors that will affect my Retirement Goal. The factors I used for establishing my Retirement Goal are as follows:
- Duration of accumulating Wealth for retirement
- Projected Monthly Expenses
- Current Investments
- Average Inflation Rate
- Expected Average Annual Returns
After establishing these factors, I was surprised by the massive difference between my Initial Unrealistic Value and The Calculated Realistic Values. My computed Retirement Value was less than half my initial guesstimate. I then used this Retirement Value in planning my investments to reach my retirement goal.
RETIREMENT CALCULATOR
*Normal inflation rate is between 3-4%.
*Average Philippine Inflation Rate from 2003-2013 years is 4.94%.
*Average Annual growth of the Philippine Stock Exchange Index from 1986-2014 is 15%.
