Most of us already know that planning for our retirement is one of the most important things we will ever have to do. However, just knowing that it is a crucial part of life does nothing to make the process simpler. Taking the mystery out of retirement planning takes research and dedication, from both a financial and personal perspective, creating a comfortable retirement is an extensive process which takes years of persistence and planning.

Although we would all like to retire as comfortably and easily as possible, any attempt of taking the mystery out of retirement planning can be a somewhat daunting task. However, it can be done with less stress and financial trauma than you might originally assume.

Why Plan For Retirement?

Before you begin to learn how to plan for your retirement, you may benefit from learning why it is essential. First of all, it's worth looking seriously at the prospects of a retirement sponsored by the government. The population within developed countries are continuing to age, and fewer working-age people are contributing to social security systems. Because significant strains are being placed on the system, governments may be forced to reduce social security benefits.

On the other hand, although the social security system may not fail, planning your retirement entirely on funds that you can't control is quite risky. It is important to realize that social security benefits are unlikely to provide you with a comfortable retirement. Social security programs are actually intended to offer a basic safety net of bare-minimum living. If you do not add your own savings to the mix, you may find that it's very difficult to enjoy the standard of living you might have grown used to.

Planning For Retirement: How Much Do You Need?

The answer to this question is somewhat complex. For most people, there is no single number that can guarantee that you will have a comfortable life when you retire. How much you're going to need for your future will depend on a variety of personal factors, including your expenses (including medical costs), the standard of living you're hoping to achieve, and the age at which you wish to retire. Fortunately, it is possible for most people to estimate a reasonable number for their specific needs. Taking the mystery out of retirement planning can simply mean crunching a few numbers and answering some basic questions.

First of all, you will need to decide on the age at which you would like to retire. Next, think about the annual income that you will need to bring in for your retirement years. It's usually a good idea to round figures up for this number, as you will generally need to assume that you're going to need at least 80% of your current salary to maintain a certain standard of living. From there, you will have to add up the market value of your investments and savings, and determine a realistic rate of return on your investment. Finally, think about the value of your social security benefits. You should be able to obtain estimates of these from the social security administration website.