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ETF Saving Goals: How Much Is Enough?

A reasonable accumulation goal of how much you should have invested (in ETFs and other investments) for most couples is 20 times the amount you spend in a year. To reach that goal, you may have to set aside a minimum of 15 percent of your salaries for a minimum of two to three decades.

For more accurate (but still ballpark) numbers, there are a number of online retirement calculators. Note that none of these is perfect; you should try several. Take note that you’ll get different — in some cases, vastly different — numbers. Consider each a ballpark figure. Average them for another ballpark-of-ballparks figure.

Note: If you use the first calculator, be realistic about your expected rate of return. (The AARP calculator and FIRECalc will help figure out a realistic return for you.)

If you use FIRECalc (FIRE stands for “financial independence/retire early”), please contribute a few dollars. But take note: Although this guy’s free website is great, his assertion that you will need less to live on after retiring than you needed before isn’t true for everyone.

It may hold true for Canadians and Brits, but most people in the United States are likely going to be shelling out small fortunes on healthcare in their older years. Even as baseline inflation has remained in the low single digits, premiums for health insurance, as well as the costs of healthcare, have increased by double-digit percentages every year for many years.

Recently enacted healthcare legislation may help, possibly, but it will not address the core of this problem: unfettered greed. You should expect the trend to continue, at least for a while.

One more bit of advice for getting the most out of FIRECalc: When the program asks you for the total annual investment expenses (as a percentage of total value), type in 1.4 percent if you currently have most of your money in mutual funds (or even if you don’t). Note how much of a difference that one change can make in your retirement projections!

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