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:
- 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.
- 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.
- 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 4% will have adequate savings for retirement. The numbers may seem scary, but let’s take National Retirement Planning Week 2015 to get started!
Sheri is a Consulting Actuary with Pinnacle Plan Design, LLC
