Most people have difficulty correctly assessing the exact amount they need to save for retirement and how they can calculate their net worth in such a way that their retirement planning is not hampered. Financial experts suggest different ways to achieve the ideal retirement fund size to cover retirement expenses.
The simplest formula
There is a simplistic formula that will give you an idea what your net worth ought to be at any point in your life. In this method you note down your age and multiply this figure with the current annual income after deducting taxes. The resultant figure is then divided by 10 and the final figure represents what your net worth ought to be at that moment of time. The disadvantage of this method is that it does not take into consideration peculiar circumstances like that of a college student repaying a big education loan, or people who net a smaller income.
There is another more complex formula to take care of such eventualities. Calculate your average income over the past ten years. From this amount subtract your minimum living expenses (an amount like $20,000 for example) and also subtract a further amount of about $5,000 for each member in your household. Multiply this amount by the years remaining till retirement and then divide this figure by eight and what you get is the minimum net worth required for retirement.
Another method is the straight calculation route to assess how far investments should progress by retirement age. This method bypasses the net worth calculation and estimates how your investments are likely to grow and how far your liabilities like loans are going to come down. Called the Time Value of Money (TVM) calculation, there are many tools online that will help you with such estimation.
To quote an illustration:
Imagine for a moment that you have saved a fund approximating $250,000 for retirement at the present moment when you happen to be 40 years old. Your net annual income is $60,000 and 10% of this income goes to retirement savings. You have made up your mind to retire at 67 with a targeted fund of $1 million in investments, without taking into account your home and other physical possessions, and you estimate that you won’t have any debts by the time you retire. Supposing your only loan balance is $150,000 on a mortgage you took out five years back. Let’s see what your TVM calculation will show.
Present retirement savings-$250,000
Annual contribution to retirement fund-$6,000
Number of years to retirement-27 years (67-40)
Estimated growth rate of the savings-6.5%
If these figures are entered in a TVM calculator it will show that your gross investment level should be $1 million by the age of 67 years. Assuming that you pay off the mortgage you will also become debt free by that age.
If the TVM calculator indicates that you are going to fall behind your targeted savings amount by retirement date you have to mobilize additional savings or cut costs or reorganize your priorities to save more for retirement.
How the cash loan for title helps you in boosting investments
It becomes obvious that you need a bulk investment to give shape to sagging retirement funds and there is no better source for instant money than a simple loan for vehicle title. The car equity loan is yours if you offer the collateral of your car title. The auto equity loan is approved even when you have a bad credit history, and the interest rate charged, viz. 25% APR will not strain your repayment. The auto collateral loan can be easily repaid using a flexible monthly payments schedule. The pawn car title loan is the quickest route to unlocking 60% of your car equity and this amount can be very useful in boosting your fledgling investment portfolio. You can also use this money to fuel high growth stocks that will grow your savings effectively over the remaining years to retirement.