Children. By the time most of us retire, our children will be on their own. We hope. But maybe you'll want to help your son with the down payment on a new home. Or maybe your thirtysomething daughter has returned home, forcing you to put off dreams of condo life for a few years. Once a parent, always a parent -- so budget like one.
Other items to include in a retirement expense form: transportation costs, which include cars, gas and insurance; taxes, which, thankfully, should decline for many of us; and those monthly bills for cable television, Internet access or cell phones. It adds up.
Number of years in retirement
Next, project how long you'll need to be paying for your goal.
Say that your goal isn't retirement, but sending your child through college. Will that expense stretch out over four years? Or is postgraduate study in the little one's future, too? Or maybe your goal is saving for a home and paying off a mortgage. The easy part is figuring out what you'd like to put down. But do you plan to use your investments to help pay your mortgage? If so, the goal for this pool of money may extend over 20 or 30 years, depending on the terms of your mortgage.
Back to the mother of all financial goals, retirement. Here, you need to consider just when you want to bid the working world farewell. Have you dreamed of an early retirement, or are you someone who can't imagine not working at least part time?
Then, unpleasant as it is, you'll need to project when you'll bid the world adieu. When it comes to life expectancy, think long. While most of us won't become centenarians, it's better to err on the side of longevity. Otherwise, you may run out of money.
When it comes to money, inflation is your worst enemy. $120,000 a decade from now will not have the same purchasing power as $120,000 today.
It's essential to make some assumptions about future inflation rates when estimating how much your goals will cost. When it comes to retirement planning, many advisers use a 2%, 3% or 4% inflation rate.
(College costs, however, have been growing well ahead of inflation. Some advisers recommend using higher rates when calculating future college costs.)
Congratulations, you now have some idea how much money you'll need to fund your goals. In the next few courses, you'll discover how to invest to meet those goals.
VIDEO ON MSN MONEY
Copyright © 2014 Microsoft. All rights reserved.
Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.
[BRIEFING.COM] Range-bound action continues with the S&P 500 trading inside of an eight-point range that has held since the open.
All ten sectors continue holding gains with most cyclical groups trading ahead of their defensively-oriented counterparts. The materials sector (+1.2%) sports the largest gain, while industrials (+1.0%) and energy (+1.0%) follow not far behind.
Interestingly, the strength of mid-tier sectors has overshadowed the modest underperformance in the ... More
More Market News
|There’s a problem getting this information right now. Please try again later.|
MUST-SEE ON MSN
- Video: Easy DIY smoked meats at home
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'