It should go without saying, but I’m sure everyone who visits the Motley Fool for investment advice hopes to have a comfortable retirement. In order to do that, investors should plan out the steps they need to accomplish prior to retiring.
One of those steps is figuring out how much you should have invested by a certain age. Of course, this number will change depending on your goals and life circumstances. However, we’ll take a look at some of the research conducted by different institutions to help you get an idea of what may need to be accumulated.
How much money should you have in the market?
One of the most common guidelines regarding retirement is for investors to have three times their annual salary saved by the time they turn 40. That means if you make $60,000 per year, by the time you celebrate your 40th birthday, your investment portfolio should be at least $180,000. By the time you turn 50, you should have six times your annual salary saved ($360,000 in this example). Finally, by 60, investors should have about eight times their salary saved up ($480,000).
It should be noted that the numbers given above are only a rough estimate for an individual. You should strive for high numbers if you plan to retire with a partner. Although it may seem like a daunting task to save up hundreds of thousands of dollars, consistent investing and good spending habits could help you get there.
If you’re reading this in your 30s and you’re thinking, “Wow, I’m very behind,” there’s no need to panic. Generally, your 40s are your peak earning years. That being said, you will have to really buckle down and get your finances on point if you want to get back on track. That’s simply because you’re fighting time at that point. Investors who get started earlier will have the luxury of time on their hands, allowing compound interest to work its magic.
What stocks should you consider buying for retirement?
If you’re interested in buying shares of different companies to help you reach your investment goals, then I would recommend looking at blue-chip stocks. This is a term given to companies that are well-established and lead important industries. In Canada, investors can consult the S&P/TSX 60. That index tracks the performance of 60 large Canadian companies that lead major Canadian markets.
An example of a stock I would recommend that investors consider buying for retirement would be Fortis (TSX:FTS). This company provides regulated gas and electric utilities to more than three million customers across North America.
Because of the nature of its business, Fortis is able to provide shareholders with a very consistent dividend payment. In addition, Fortis has shown that it can even increase that dividend over time. It currently holds a 50-year dividend-growth streak, the second-longest active streak of its kind (in Canada).
