One of the steps you will need to take to determine how much money you will need to retire is to figure out how much retirement income you will have from guaranteed sources.
Guaranteed retirement income includes things like social security retirement benefits, pension income, or annuity income. Some people include rental income from investment property in this category, although it is certainly not guaranteed.
For example, assume you look at your social security statement, and it tells you if you work until age 64, then at 65 you will receive $1,760 per month.
Calculation:
$1,760 x 12 = $21,120 per year.
Also assume you have a piece of property that you rent out. After paying all expenses, you receive about $600 per month. Occassionaly your property sits empty inbetween renters, so to develop a conservative estimate, you assume your property is rented only ten months out of every year.
Calculation:
$600 x 10 = $6,000 per year.
You now know that your guaranteed sources of income will provide you $27,120 per year.
You must compare this to your estimate of retirement expenses to begin to develop an accurate estimate of how much money you will need to retire.
On to Step 3 Calculate The Gap or
Back to 4 Steps To Determine How Much Money You Need To Retire.
