Do you know your magic number?
It’s the number you need to retire one day or simply to live the lifestyle you want in say, the next 10 years?
It’s a fact that by the time a person reaches retirement, sixty percent will not have enough money to live on.
If you’re like me, I’m sure you don’t want to be part of this statistic and even if retirement seems a long way off, maybe you’re more interested in knowing how much money you need to generate in the next 5, 10, or 15 years to live the lifestyle you want?
That’s why today I want to share my simple “magic number” calculator.
Use it to calculate what income you need to generate to retire or simply live the lifestyle you want. Just like my US colleague, Mark Ford, a multi-millionaire and master entrepreneur has done.
I’ve borrowed some of the key principles to calculating this “magic number” from Mark.
It’s what helped Mark retire at 45 – all because he had figured out his ‘magic number’. When he became bored with his lifestyle, he chose to go ‘back to work’ at 48. Today Mark is in his late 60’s living the life he wants to live.
Take These Steps below and You’ll Have Your Magic Number!
Step 1: First calculate How Much Money Your Current Lifestyle Requires
Mark calls this your Lifestyle Burn Rate (LBR).
This is the amount of money needed each year to enjoy your lifestyle. It’s easy to figure out. Simply calculate how much money you spend each month.
Step 2: Calculate your “Magic Number”
Here you need to know these two important numbers –
Firstly, you need to know how much money you’ve already saved towards your retirement in a pension fund or RA – of course if you have saved nothing then you simply leave it blank.
Secondly you need to put down a figure for a lump sum you expect to receive at “retirement”. Many people sell their house at retirement. They then buy a smaller one or rent one, with the capital made from the sale being invested with the rest of the retirement funds. If you’re a bit late in saving for retirement or simply don’t intend to downscale then once again leave it blank.
Completing this entire process will take you less than ten minutes. Please do it now. In terms of your future wealth and happiness, it may be the most fruitful ten minutes you ever spend.
It might even be that you are ahead of schedule. Or that, like my colleague, Mark Ford, you hit your number before your fiftieth birthday. It could allow you to quit your job and start a new business or go on holiday a lot.
Keep that in mind when you hit your number. You may decide to keep working on a part-time basis. If you do, you’ll be making more than you need. Enjoy it. Don’t increase your spending.
How much money do you need to simply live the life you want or to enjoy the retirement you deserve? A hundred grand? A half million? Ten million?
It is a very important question. Getting the right answer can determine how soon and how well you can start living the lifestyle you want.
Here’s to unleashing real value,
Editor, Red Hot Penny Shares