Do you know why it’s important to calculate how many hours of work cost your retirement – 02/07/2023 – De Grão a Grão

Knowing the value of something is the first step towards giving it due importance. This is the case when talking about retirement. Many postpone starting planning because they don’t understand the real value of starting earlier. Understanding this value involves knowing how to calculate how many hours of work it costs you.

You’ve probably heard that time is money, right?

We usually say this in an unpretentious way, for example, when we are waiting for someone to be late. However, this statement carries a broader message.

I will propose a challenge. Would you know how to say now, without calculating, how much you earn per hour of work?

Spenders usually do not know this account.

Maybe you don’t find this relevant or haven’t stopped to calculate. So do it now. Knowing this information is essential in controlling your budget. In this way, I will help you with the account.

Consider that you earn BRL 8 thousand per month net of income tax. Yes, you need to consider the net amount, as the IR portion does not belong to you. The portion of the IR is the portion you work for society. We want to know the portion you work for yourself.

If you have a work routine of 40 hours per week and considering only 4 weeks in a month, then your hourly work is worth about R$50. It means that whenever you buy something for R$50, it cost you an hour of work.

Therefore, we need to better consider our expenses, as they cost hours of work. Additionally, we know that an hour of our time at work is more important than what we get for it. So we come to today’s central reflection.

Starting to save early for retirement can save many hours of your day job. See the calculation.

We should start with estimating the financial assets needed to retire with the desired income. Remember the 4% formula or the 300 formula?

This is a pocket formula for estimating the wealth needed to retire.

To do this, just multiply 300 by the monthly income you want. For example, if you intend to retire earning an additional R$ 4,000 per month to the INSS, multiply 4,000 by 300. Doing this calculation, you arrive at the amount of R$ 1.2 million of financial assets needed at the time of retirement.

If you are 30 years old and intend to retire at 65, you would need to save BRL 1,080 per month if we consider a return of IPCA+5% per year. That’s 21 hours or close to half a workweek. This savings effort seems very reasonable. But, many end up putting it off.

If you wait to reach 40 to worry and intend to retire at the same age of 65, you will need to save R$ 2,040 a month to have the same complement.

Soon, it will cost you a week of work. For many, this expense becomes a difficult burden to bear in the budget. That is, the 10-year postponement cost you half a week more work per month and a much greater budget effort.

Do you know how many hours the same individual would have to work to have this retirement if he waits for 50 years of age to start?

He would have to work more than two weeks just to pay his desired pension. The necessary savings is R$ 4,500 per month. Do you agree that, for someone with a net income of BRL 8,000, saving this amount seems unfeasible?

It’s no wonder that many who hope to reach 50 no longer care and even criticize anyone who talks about investment for retirement, as I’m warning you now. These say you better enjoy life.

Planning your financial goals is essential to understanding the best path to achieving your financial goals. Starting this planning earlier will save you many hours of work.

I’m sure you’d rather work less than work harder to achieve the same goals, right? So let’s plan together as soon as possible.

Michael Viriato is an investment advisor and founding partner of Investor House.

Talk directly to me via email.

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