Do you have any idea of how much you need to save for the retirement lifestyle you envision? If not, you’re like the majority of Americans who have never done the math. According to the 2009 Retirement Confidence Survey conducted by the Employee Benefits Research Institute, only 44% of workers have tried to calculate how much money they will need for a comfortable retirement.
Nearly 47% of retirees left the workforce earlier than planned.
53% of American workers have saved less than $25,000 for retirement.
Whether you’re retiring today, a year from now or the idea of retirement is in the unimaginable distant future, getting a handle on what you need ill help you prepare for the road ahead.
When workers have a better idea of what they may need they may respond by saving more. In fact, investors with a financial plan typically have twice as much in savings and investments than investors without a written plan.
The first step is to get a handle on what your current cash flow position is now and what resources are available for saving for the retirement goal.
There is a standard rule-of-thumb that you need to plan for 70% of your preretirement income. But an individual’s reality is more complex.
It really depends on your health, family history of longevity, desired lifestyle and debt situation at time of retirement.
One of the myths of retirement noted in the Road to Retirement workshop series presented by Quest is that your personal cost of living will drop and you’ll pay less in retirement. Given the reality of blended families, marriage at a later age, housing costs and increasing healthcare costs in retirement, it may be better to plan for 80%, 90% or even 100% of pre-retirement income.
When thinking about a retirement income goal, don’t forget about the potentially ravishing effects of inflation. A dollar now will not likely buy the same amount of goods and services that a dollar one, 10 or 30 years from now will.
So save early and often. And don’t forget to include a good dose of equity – preferably dividend-paying type stocks to help counter the effects of inflation.
Now’s the time to start with a plan. You can get your FREE Starter Roadmap here: www.boulevardr.com/goals/SteveStanganelli.