# How Much Should I Save for Retirement? – Part 2

If you read Part 1 of this series, you know that many people are worried about not having the approximately \$33,000-\$60,000 AUD needed for a decent to nice retirement lifestyle. Fortunately, the information age is giving us opportunities to earn money far into retirement in ways that don’t require too much sweat.

There are many answers to the question, ‘How Much Should I Save for Retirement?’ That’s because there are many ways to calculate the numbers, and there are many individual situations that don’t quite fit into the norm. Even so, let’s look at two popular ways to figure it according to the WealthAdvisor website, http://ww2.wealthadvisor.com.au/, published by Spring Financial Group Pty Ltd.

The 60% – 70% rule: A technique that has a long history in the world of financial planning is to calculate ideal retirement income as a percentage of current income. This percentage is usually set at between 60% and 70%.

So, if your annual combined income is \$83,000 AUD, you’d multiply by .60 or .70 and you’d instantly have the figure you’re looking for: \$49,000 or \$58,100 respectively. This seems a very simple way to figure out what you need, but if life were this simple, we’d have very few problems in the world. You might want to pad this figure quite a bit, especially if you don’t own your home outright.

Multiples: Another rule-of-thumb method is the use of multiples to determine the ideal level of retirement capital savings.… draw up a detailed budget of after-tax expenditure and then:

Take your total monthly expenses and either multiply it by 13, 15, or 17, depending how long you’re planning to stay in the workforce. If you’re staying in until 55, multiply by 17. If you’re planning to stay in to age 60, multiply by 15. If you’re not going to retire until age 65, multiply by 13. So, essentially, you’re taking your actual current expenses and multiplying them by how many years you’ll probably live.

Again, this is a very simple way to figure it out. However, it’s kind of naïve to think that you’re going to die by a certain age when lifespans are getting longer and longer. Also, how can you be sure that your expenses are going to stay the same?

Well, I think we’re all about ready for some good news from the Spring Financial Group Pty Ltd.:

Some retirees still manage to earn sizeable incomes even though they are officially retired. This is done through remaining loosely connected with their old profession (e.g. through consulting, freelancing or locum work) or perhaps by turning a lifelong hobby or passion into an income source.

There is no doubt about it: unless you’re already well beyond what you need in retirement, a great strategy is to continue to earn as long as you can. However, you don’t have to do the same backbreaking, soul-draining work you’ve been doing all these years. More and more, people are earning money online through the Internet, which connects you to buyers all over the world.

Let’s say you’re close to retirement age, and you love to knit. Yes, there was a lady who built a business well over \$1M USD in revenues by showing people how to knit on the Internet. If she can milk that amount of money out of her online skills, you can do the same, even if you don’t have any better computer skills than she did. Yes, all the technical stuff can be learned or outsourced. So there is no better time to follow your dream.

How much should I save for retirement? As much as I can, and I should consider turning my dreams into reality, sharing them on the Internet, and making money from home. If you have any questions about how to do that, I’m certainly available to talk and I’d love to hear from you.