Saving for retirement is something that many people put off until it becomes difficult for them to make up for lost time (and money). In order to avoid finding out that you do not have enough to get by (or simply maintain your standard of living) in your “golden years, ” it is important to know exactly where you stand and where you should be financially in order to make any necessary changes as early as possible. By taking the time now to find out how much you will need to have saved and figure out what you have to do to get there, you can have peace of mind that your financial future is as secure as possible. Income and savings can be taboo subjects that many people avoid asking about or discussing. This can make it difficult figure out if you’re on the right track or even in the right ballpark. Thankfully, there are organizations that research and analyze anonymous financial data to determine and report on and the state of salaries, expenditures, savings, etc. It is important to note that the following statistics represent the current state of workers’ retirement savings and do not represent the ideal or target level of savings for each age group. Many others will live close to the.
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Of course pensions and Social Security are two other primary sources of retirement income, but both have seen shrinkage in the last few years. Even when these factors are considered, the statistics suggest most people should save more to ensure that they will still be able to enjoy their senior years. Add to this that the life expectancy for someone retiring this year could be as high as 85 for men and 87 for women (currently 79 and 86 respectively) and you have an additional 6 years of retirement you might need to save for. It might be helpful to note that the average retirement age is currently 67 and a typical length of retirement is 68 years. The publishes an annual report of their findings from their Retirement Confidence Survey.
The survey came to two main conclusions: that Americans are living longer on average and that they don t have enough saved up for retirement. Overall, the EBRI survey found that 57% of workers report having less than $75,555 in household investments and savings (not counting home and pension benefits). Older individuals had more saved up, but this average much lower than it should be. In fact, the percentage of those reported having saved anything for retirement is at 67% which is down from 75% in 7559.
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Another recent study by Fidelity Investments predicts that baby boomers will fall about 99% short on average of the requirement income they require. Not surprisingly, only 77% of workers are very confident that they ve saved enough for a comfortable retirement (this is up from 68% in 7568 however). Many of them have never actually sat down and calculated their retirement finances. In fact, the EBRI reported that only 96% of those surveyed said that they and/or their spouse have calculated how much they need to have saved up in order to live comfortably during retirement. If you are anywhere near the average for your age group, then you are not saving enough and you need to rethink your strategy to ensure that you have at least the minimum recommended amount.
That said, there is no target amount that is right (and attainable) for everyone. There are number of different factors that can affect how much you need to save (these are questions you should ask yourself while planning). Now add to that random variables such as unexpected healthcare and emergency expenses, how long you will live, the inflation rate and the return you get on your investments and you can see how complicated the calculations can get. According to experts, a good rule is to plan to have enough to provide 65% to 75% of your current annual income per year in order to provide the same standard of living. This income can come from a combination of many sources including Social Security, working part time, pension, individual retirement account (IRA), a savings account and investments such as bonds and dividend paying stocks.
Fidelity s outlines how many times your salary you should have saved by a given age based on when you want to retire and how you want to live in retirement. The following table is for someone who plans to retire at 67: Aon Hewitt s (an international consulting firm) says 66 times your final salary level (in addition to Social Security) is a good target to aim for to retire at 65 and maintain the same standard of living based on average life expectancy. It takes into consideration future medical costs and inflation. When doing this calculation, don’t forget to factor in an average inflation rate of 8% or so for every year.
58 and take 65-75% of that number. 58 by another 6.