It is National Save for Retirement Week!

save  4 retirement week

Retirement is something that many people look forward to, some from their first day on the job!

What is retirement going to look like for us?

As a nation we are not big savers.  According to the U.S. Census the percentage of people ages 30-54 who do not believe they will have enough money saved for retirement is 80%, while 36% of Americans do not save at all for retirement.

There are several questions you should ask when determining how much to save for retirement:

  1. How much money will I need in retirement?  According to Statistic Brain, to replace monthly income of $5,000 you will need $833,479 if your retirement lasts 20 years and $1,060,751 if your retirement lasts 30 years. These amounts assume your portfolio will earn 6% during retirement and inflation will be 2% during that same period.
  2. How much do I need to save to accumulate enough? Using the same 6% assumed return as above; you will need to save $10,542 each year for 30 years to accumulate the needed $833,479.
  3. How should I save?  If you are fortunate enough to have a 401(k) plan available at your workplace then that is the best savings vehicle.  You can save on a pre-tax basis, lowering your current income tax bill while accumulating retirement savings. According to the Employee Benefit Research Institute, 61% of all American workers over the age of 16 work for an employer that sponsors a retirement plan.

According to Statistic Brain, out of 100 people who start working at the age of 25, by age 65 only 5% will have adequate savings for retirement.  The numbers may seem scary, but let’s take this first day of National Save for Retirement Week to get started!

Sheri is a Consulting Enrolled Actuary with Pinnacle Plan Design, LLC Sheri Alsguth

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