How Much Do You Really Need in Your Nest Egg?

How Much Do You Really Need in Your Nest Egg?

Retirement and savings accounts = two of the most important (and, to be honest, confusing) things to understand and discuss when it comes to financial planning. See, the ability to retire — or not to be able to retire — is a question that everyone will want to eventually answer. From the age you can comfortably retire all the way to the amount of money it’ll take to get you there, you’ve probably wondered: how much do you *really* need in a nest egg? How on earth are you even supposed to get there?  We’ve got you covered. Here’s what you need to know about nest eggs.

What is a nest egg?

Wondering what a nest egg is? It’s a portion of money set aside for a certain reason — usually retirement. However, we also recommend having a few different kinds of nest eggs: emergency fund nest eggs, housing expenses nest eggs, educational nest eggs, AND retirement nest eggs. Today, we’re going to be diving primarily into retirement nest eggs, but what you really need to know is that a nest egg is an important thing to have — regardless of what you have it for.

How much do you really need in your nest egg?

The thing is, the amount of money one person needs in their nest egg is always going to be different from the amount of money that someone else needs. Money is inherently personal, as is everyone else’s financial situation. Wondering how much you really need in your nest egg for savings and retirement? Here’s how to find out:
  • What are your non-negotiable expenses, each month? (Mortgage, groceries, health insurance, etc.)
  • What are your additional payment requirements each month? (i.e., do you or will you have dependents?)
  • What is your current income? How much of that current income would you like to replace in retirement savings?
  • What age do you want to retire? (i.e., a person who wants to retire at 40 needs a different nest egg than someone who wants to retire at 65)
  • What are your retirement goals? Do you want to stay home? Travel? Buy investment properties?
Based on those questions, you can define a general nest egg goal. This calculator from the AARP is also very helpful.

How do you save money for your nest egg?

Once you’ve determined how much money you need to save for your nest egg, you can start saving for it — and you don’t need to worry about saving up the entire amount in cash, either. We promise! Enter: retirement plans, employer-sponsored retirement accounts, and investments. From 401(k)’s and Roth IRAs to pension plans and stocks, you have options — and the fact that you’re thinking about your nest egg now matters a great deal. After all, compound interest and time is on your side… so, congratulations! — We’ll be diving more into savings and nest eggs here over the next few months, so stay tuned! In the meantime, you can always find smart financial advice and knowledge around the financial services industry here with us at CIFS. Learn more here. 

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