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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. 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. 58 and take 65-75% of that number and add it to the total. There are a number of calculators available online to help you do this. 5) Start Early Start building your nest egg as soon as you have a steady income.

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Compound interest will have a huge impact over 9 decades on the money you invest in your teens and early 75s. 6) Reduce Expenses The best way to start improving your retirement savings is simply to cut down on your expenses and save the difference. Depending on your situation, you may need make some sacrifices to find ways to cut your expenses. In some cases, you may simply need to reduce your amount of vacation time or the amount you spend on hobbies. 7) Don t Touch What You ve Already Saved Never raid your retirement fund, as it can be difficult to make up lost savings. Of course, one cannot always predict what direction life will take, so it is good to have a separate emergency fund to take care of unexpected expenses. 8) Take Advantage of Available Plans Check to see what types of plans your employer offers. Investments plans like 956K are great because they protect your dividends from taxes and they provide good interest rates. Some employers may even match your savings up to a specified percentage of your salary. Other good alternatives to a 956K are retirement accounts like IRAs or mutual funds. 9) Adjust Asset Allocation Adjust the allocation of your assets. Young people should invest in opportunities that are higher risk, higher return, but everyone should adjust to lower risk, lower return vehicles as they get older. 5) Work Longer Delay retirement for 6 or 7 years (or more). This can make a huge difference because the benefits are two-fold. First, it brings in a year or two worth of salary.

Second, it reduces the number of years you will have to rely on your retirement savings. Working part time during retirement is another option that has the same (but relatively smaller) effect. 6) Increase Contributions as You Age. As you get older, your financial responsibilities slowly disappear. The kids move out, you pay off your mortgage (finally), you only need one vehicle instead of two, etc. This is a great chance to increase the amount you put away using this extra money instead of using it on vacations, new cars, etc. 7) Downsize Downsize your home/lifestyle. Unless your area was hit hard by the real estate decline, consider selling your home, using a portion to buy a smaller, less expensive house (in an area with lower taxes) and investing the remainder in your retirement. Generally, you should be careful about how much money you put in stocks because you can never tell when the market will swing in a negative direction. However, a healthy investment portfolio should have at least a small portion in stocks and they are great way to diversify your finances. For reduced risk and recurring income, buy stocks that pay dividends on an annual or semi-annual basis. If you plan well and are able to meet the cost of living after retirement, then you can focus on enjoying all that those years have to offer. Generally, it is up to the individual to have the right attitude in order to find the potential, sense of purpose and enjoyment in retired life. Many people fail to make the adjustment because they have become too set in their ways. Some steps that they can take to adapt to the next stage of their lives include:

Finding new interests – Try new things to figure out what is that you want to do with your free time. If you are unable to follow your old pursuits, then find new ones that interest you. For example, think about taking up ballroom dancing, curling, bowling or swimming as these activities can help you and your spouse stay healthy while providing plenty of fun in the process. Help others – One of the most satisfying ways to spend one’s retirement is giving back to the community. Think about helping the poor, the homeless, children, animals and the sick. There are so many ways you can use your time and effort to help those in need. You may feel more purpose in life than you ever did before by giving back. Become a teacher, mentor or coach – Pass on your experience and knowledge to the younger generation. Start a small business – Make some extra money and use up some mental and physical energy in the process. This could involve anything from selling products online, dog walking, babysitting, gardening, writing or painting. If reading this as stressed you out, just sit back, take a deep breath and go back through this guide (taking notes this time) and bring up these points when you’re developing a plan with your spouse/family and a certified financial planner. No matter where you’re at with your savings or what your current financial position is, there is still time to turn things around. Talk to a financial advisor and they will work with you to create a realistic and attainable plan for getting your retirement savings back on track. Don’t put it off. Get started today.

Please note that the statistics and advice in this guide is for informational purposes only and should not take the place of professional financial advice. What are your thoughts on the current state of retirement savings?

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