According to one financial expert, how happy you'll be after you stop working isn't just about how much money you have.
It's based on how much money you have in relation to how much you need.
Wes Moss, the chief investment strategist at Capital Investment Advisors and host of "Money Matters," interviewed over 1,300 retirees in 46 states.
He details the findings of his survey in his book, "You Can Retire Sooner Than You Think: The 5 Money Secrets Of Happy Retirees," where he writes his observations of the happiest retirees, from how they think to what they drive.
From all of that research, he came up with a ratio that he finds could help predict your financial security, and by extension, your happiness, in retirement. It's called the Rich Ratio.
It's pretty simple. To figure out yours, you just need to determine:
1. How much money you'll have. This number should be your monthly income, including any income streams supplementing your savings, such as Social Security, a pension, or rental income.
2. How much money you'll need. This number should be your monthly expenses. Don't just guess! How much will your living expenses, groceries, transportation, entertainment, and even medical costs set you back? If you currently keep a budget, that's a great place to start sourcing these numbers and modifying them for your planned retirement lifestyle.
Then, divide the first number (how much money you'll have) by the second (how much money you'll need) to come up with your Rich Ratio. For example, $2,400 income divided by $2,000 expenses equals a Rich Ratio of 1.2.
It isn't revolutionary, but it does boil down your financial security into a single number. "Any ratio over one is fantastic," writes Moss. "Any ratio below that, well — let's just say you have some work to do."
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