The money you should save to be able to retire from the age of 55
Although in Spain it is not possible to receive the contributory pension up to age 65as long as the specific beneficiary is over 37 years old and has made contributions for 6 or more months, there are some saving methodsor that allow you to create a large mass of money to be able to retire early. One of the best known systems is the FIRE movement (‘Financial, Independence, Retire Early’), an idea that was born in the United States with the aim that those interested could achieve early retirement through an aggressive financial savings and investment plan.
Some of the people who have applied it have achieved save up to one million euros, as is the case of Katie and Alan Donegan, who after a trip to Costa Rica decided to apply this method to live with total financial freedom. Today, at just 37 years old, both have been able to leave their respective office jobs and retire early.
But this is not the only method, Danathea Doe, a personal finance expert, has pointed out in Travel+Leisure the keys to achieving this goal as soon as possible. In fact, when asked What is the essential date for retirement planning?she always remembers a proverb, “the best time to plant a tree was 20 years ago. The second best time is today.”
What is the necessary income?
Beyond starting to save as soon as possible so you can have enough income on retirement day, Doe says it’s important to know how much you’ll need. Those who want to be ahead of the age established by the government must start between 20 and 30 years in order to accumulate enough. The rule is simple: “To calculate how much money you need to save to retire at age 55, take your current salary and multiply it by 10“.
This can be an ideal starting point, but it is important to take into account many other factors that may affect future income. Therefore, if a person earns the minimum salary of 1,000 euros, that is, 14,000 a year, he will have to save at least 140,000 euros. Of course, that amount may not be enough once you retire and decide to make a bigger effort. “My suggestion is to use the formula for establish a baseline. Then, find out what it would cost to live the lifestyle you want to experience in retirement.”
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