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How Much Will You Need to Retire?
Short answer? A lot. Was this the answer you were hoping for? Probably not, but we’re also pretty sure that you already knew that today’s retirement is going to be expensive.
Since we’re living longer and some of us are trying to retire sooner, many retirees now find that they had 35-40 years to save a nest egg that will have to support them for 20-30 years. And, this is at a time when your healthcare expenses are likely to increase over time.
So, now more than ever, what you do with those years, how you live, even where you live, are all key elements tied up in how much money you’ll need when you get there.
If retirement is so expensive, why bother?
If you have any hopes of getting off the workforce treadmill sometime in your future, the Social Security Administration recommends that your retirement income should equal at least 70 percent of your pre-retirement income.
If you’re the more conservative type, you may consider the idea that you may need all of your current annual income in retirement as opposed to just a percentage of it. Of course, everyone's situation is different, and how much you need to set aside depends on your personal goals and lifestyle choices.
Health care and insurance expenses continue to climb and may increase as you grow older. You'll also need to have enough money to take good care of yourself so you can enjoy the freedom of your retirement years.
Whether you believe the experts who say Social Security won't be around in the future, or the ones who say that it will, the fact is that its benefits may not be enough to see you through.
According to the Social Security Administration, average monthly benefits payable in January, 2005 without cost-of-living increase of 2.7% was $930 for all retired workers. Clearly, most of us would need to supplement this amount of income to live comfortably in retirement.
The average life expectancy in the U.S. for a person who reaches the age of 65 in 2003 is an additional 17.5 years or to age 82.5. By gender, men who made it to age 65 could expect to live an average of 16 more years, and women even longer an additional 20 years. That's a long time to live if you haven't adequately prepared yourself. (source: Social Security Administration)
Now What?
Simple. Take a few minutes to go to our Retirement Needs Calculator and put in some numbers that apply to your situation. The calculator’s unique slider bar interface makes looking at different options fast and fun. Then we strongly encourage you to talk to your financial professional so you can put your own plan in motion, or add to the one you already have.
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