If you, like many UK citizens, crave a retirement comfortable, this dream should start to be built as soon as possible. To depend on public pensions is very risky, and setting up a reserve to guarantee the future is not something that can be done overnight.
When we think about it, it is common to ask questions such as: “what is the ideal asset for my age?“Or”how much should I have now to not suffer suffocation in the front?”.
But if you haven't started building your equity yet, don't despair. In this post, we will show you ways to calculate what your savings goals should be according to your age group, in order to maintain the standard of living when you stop working. Check out everything below!
The importance of building heritage
After Social Security Reform, the time required to retire by age has increased and other retirement rules have also changed. With that, look for alternatives to guarantee a peaceful future it became even more necessary to avoid surprises up front.
The problem is that the UK residents, in general, has never been a big fan of long-term thinking: according to data from Anbima (UK residents Association of Financial and Capital Markets Entities), 56% of the population does not keep money and it doesn't have any kind of financial reserve.
So, if you are concerned with issues such as the ideal heritage for your age, know that you already stand out from the majority. Being aware of the importance of saving is the first step in defining and achieving your goals.
But, after all, where to start? In a nutshell, the steps to achieve a good heritage are very simple:
- set goals;
- save part of your monthly earnings;
- invest the savings;
- have the patience to accumulate income over the years.
To give you a boost, we will present two useful methods for you to calculate how much you should have saved today according to their age group. Next, we will point out some essential factors that must be considered when saving and investing your money.
Method 1, 3, 6, 9
One of the simplest methods to define the ideal patrimony for your age is the 1, 3, 6, 9, in which each number represents a multiplication factor for your annual income.
The rule is applied every ten years, from 35 to 65 years old, minimum age for men to retire (for women, the minimum is 62 years old). The progression is as follows:
- 1: 35 years old, the ideal patrimony is equivalent to the sum of an annual salary (monthly salary x 12);
- 3: at the age of 45, the ideal patrimony is equivalent to the sum of three annual salaries;
- 6: at 55, six annual salaries;
- 9: at 65, nine annual salaries.
At the end of the journey, the accumulated value should be enough for the person to retire with the same standard of living that he has always had.
Imagine a person who won R $ 5,000 monthly steadily throughout your career. In this case, the account looks like this:
|Age||Annual salary||Accumulated equity|
|35||R $ 60 thousand||R $ 60 thousand|
|45||R $ 60 thousand||R $ 180 thousand|
|55||R $ 60 thousand||R $ 360 thousand|
|65||R $ 60 thousand||R $ 540 thousand|
“Okay, I already know how to set goals according to age. And now? How much should I save per month to reach them ”?
The second phase of the method indicates exactly that, with the percentage of the salary to be saved also varying according to the age group:
|From 25 to 40 years old||Age –15||32 years old – 15 = 17% of salary|
|Over 40 years old||Age –10||47 years – 10 = 37% of salary|
|After 50 years||Age =% to be saved||50 years = 50% of salary|
As we can see, the amount to be saved increases as time goes by, but that does not mean that you will be living with less money each year.
It is worth remembering that the calculations presented here are simplified, without considering interest received from investments and salary variations. Over time, the tendency is that your remuneration will increase, so if you maintain the standard of living, you should have no problem saving a higher percentage.
Formula for annual gross income
Another way to calculate the ideal wealth for your age is the formula created by the Americans Thomas J. Stanley and William D. Danko, authors of the book “O Milionário Mora ao Lado”.
With this method, just multiply your annual gross income (RB) for your age (I) and divide the result by 10, referring to the idea that a person must keep at least 10% of everything he earns to accumulate equity.
(RB x I) ÷ 10 = ideal equity
To find your gross annual income, simply multiply your monthly salary by 12 (or 13 if you receive unemployment insurance). Additions such as bonuses, prizes and PLR must also be added to the total amount.
Here are some examples for you to see how the calculation is applied.
Arthur, 20, has a monthly income of R $ 1 thousand, that is, he receives a total of R $ 12 thousand per year. In this case, the ideal asset for his age will be:
(R $ 12,000 x 20) ÷ 10 = R $ 24 thousand
In practice, it is very difficult for someone to have R $ 24 thousand accumulated at age 20, but in any case, this number should be used as a goal. In this way, the person feels encouraged to save and start planning to achieve the goal.
Clayson, 30 years old, has a monthly salary of R $ 3 thousand, totaling R $ 36 thousand per year. Therefore, the account is:
(R $ 36k x 30) ÷ 10 = R $ 108 thousand
It turns out that Clayson, in addition to R $ 90 thousand invested in fixed income, also owns a car in the amount of R $ 35 thousand, which also counts as equity. He has also kept a value that he received as an inheritance, but he is not considered because it is not the direct result of his work.
Added to the applications and the car, Clayson's accumulated equity stands at R $ 125 thousand, surpassing the ideal total for his age. Great, isn't it?
But that does not mean that he can relax. Remember that, as time goes by, the financial goal gets even bigger. Therefore, periodic budget reviews will still need to be done to ensure that everything is under control.
Factors that influence your assets
When calculating the ideal equity for your age, don't just consider the numbers. There are a number of situations that can influence your ability to accumulate money and achieve (or not achieve) the established goals.
Whatever your salary and age, the goal you set will certainly have a high value. Therefore, it is unlikely to be achieved by someone who is at the beginning of their career or who has just had a change in salary (up or down). These factors tend to greatly reduce the chances of saving large amounts.
THE career and lifestyle it also has a big impact in putting the idea into practice. It is natural that some professions pay better than others, and also that some people have higher costs than others. It is all about balancing spending and earnings and devising the best plan possible, without haste.
Another aspect of great influence is how to make money work for you. Invest well it is essential to build equity and increase it, preventing your economies from losing purchasing power.
If you put all the money you saved into savings, which yields below inflation, in the future it will be worth much less than it is today. So, avoid the obvious and study the best ways to apply your earnings in the long run.
Private pension plans, Treasury Direct, CDBs, LCIs and LCAs are great long-term investment options for anyone looking to accumulate equity. If you go deeper, the market for variable income it can be a good alternative to obtain higher yields in less time.
>> Do you want to know more about how to invest your money? Check out this other blog post:
Types of investments: 7 most profitable options in Brazil <
Read, watch videos and search a lot about each type of application available on the market. Thus, you will be able to consistently transform the money you save into a robust and profitable investment portfolio, which can help you accumulate the ideal equity for your age.
As we could see throughout the article, the question “what is the ideal asset for my age?” has a different answer for each person. If, when doing the calculations, you are within the recommended value, keep it up! But if it's below, set the target amount and make the changes that need to be made to hit it.
Did you like it? Tell us in the comments how you plan to grow your assets. We are available to answer any questions you may have on the subject.