Paydays till retirement

How many paydays do you have left until you reach retirement age? Have you ever calculated this?

Perhaps you plan to retire early which means you have even less paydays left, you better work out exactly how many.

Let’s assume you work in a standard job where you get paid monthly. That would mean 12 paydays each year. If you are 35 now and plan to retire at age 65, that would work out to 360 paydays.

So what exactly does this mean?

This is simply a number to help you with your retirement planning and goal setting. You cannot simply have a goal to “save as much as I can”, or “save enough” as these goals are hard to quantify. In fact, you will never know if you have reached your goals.

Your retirement plan needs to include specific amounts. You will most probably want a large pension fund, perhaps you aim to have other income such as rental, and maybe you have assets which you specifically plan to sell when you reach retirement age. These are all great, but they need to be realistic and you need to reassess them often.

Using your “paydays ’til retirement” number you can easily plan and track how you are doing wth regards your retirement plan. You have a set time period and set amount and can use various methods to plan, predict and assess your situation.

Let’s assume you have 360 paydays left, and your goal is to have 2 million in a retirement fund at retirement age. You can simply create a spreadsheet with 360 rows. Show your current fund balance, your current contributions, assumed growth (rather assume a lower growth and plan accordingly) and assumed salary (and contribution) increase (again, take a lower assumption).

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This will then show you whether you’re on track or not.

This kind of planning doesn’t take into account major life changes that could happen, and we cannot predict the country and global economy. In fact, don’t try to make things too complicated. Just do some basic calculations and see where you stand.

If you have a financial advisor they can of course assist you greatly with this as they have wonderful software and tools to take into account all sorts of scenarios. It’s definitely worth contacting someone if you feel you need help.

If you’re wondering how to decide what your goal amount should be, that is more complicated and we’ll cover that in some articles soon. In the meantime though, it’s best to read up as much as you can and to consult a financial planner who can assist.

Your number of paydays until retirement will slowly count down. Think of it as a ticking time-bomb… are you ready?