How Much Money Will You Need in Retirement?
Estimating the amount of money you will need when you retire is no simple task. Most family child care providers have not paid much attention to this question. But it's something that all child care providers should do even if you are decades away from your retirement.
Most experts will say you need about 70-80% of your current income in retirement to maintain the same standard of living you have today. So, if you are single and your business profit is $40,000 you will need about $28,00-32,000 per year when you retire. Social Security will help cover some of this.
To help you plan more carefully for your retirement future, one place to start is by using online retirement calculators. They can give you a sense of what you will need when you retire and what you should be saving now so you can reach your retirement savings goal. Here are a few such calculators:
Choose to Save Ballpark Estimate
Fidelity Retirement Tools and Calculators
The easiest one to use, in my opinion, is the Choose to Save Ballpark Estimate. You can print it out or you can use their interactive calculator online.
Don't be discouraged if you find out that you should be saving more than you are today. The earlier in your life that you understand how savings can grow over time, the more options you will have to meet your long-term goals.
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For more information about planning for your retirement, see my Family Child Care Money Management and Retirement Guide.
