When it comes to saving for retirement, many workers can relieve themselves of a false sense of security.
About 13% of workers over the age of 60 do not have a penny stored for retirement, according to a Federal Reserve Bank student, but 45% of workers in that age group believe they are on the right track to retire comfortably. Also, among employees aged 45 to 59, only 27% have $ 250,000 or more stored – although 42% think they're on track.
A quarter of a million dollars may sound like a lot of money, but if you withdraw, say a conservative $ 30,000 a year, these savings will only last about eight years. If you think you're on track when you don't actually save money in a few years, set yourself up for financial failure. Some years in retirement, you may find that your savings start to run dry ̵
If you run out of money in retirement, you will probably end up relying on social security schemes to make ends meet. Only over half of recent retirees say they rely on their benefits as their primary source of income, a survey from the Nationwide Retirement Institute found, while only 11% say that most of their earnings come from their personal savings. However, the average social security beneficiary receives only about $ 1,400 per month, which is unlikely to be enough to live on. If you are under the impression that you can skate through retirement with little or nothing, you may save for a rude awakening.
So how do you avoid the risk of a financial disaster during retirement? The key is to do your homework and make sure you have a realistic idea of how much you need in savings to last the rest of your life.
Determining Pension Requirements
To find out if you are on the Spore to retire comfortably, you must first decide what to aim for. The easiest way to do this is to link the information to a retirement calculator. However, please note that different calculators use different considerations when you come up with your results (such as a factor in social security benefits and the effect of inflation, while others do not), so you may want to look at a few different calculators for to receive a number of results.
When you enter the information in the calculator, be as honest and accurate as possible. Many calculators will ask how many years you plan to spend in retirement, for example. The average life expectancy is around 85 years, estimates the privacy management, but one-third of today's pensioners can expect to live over 90 years. So it may be a good idea to celebrate on the caution and assume that you will spend more time in retirement than you think.
Also consider how much you expect to spend each year in retirement in proportion to what you are using now. For many retirees, spending will be reduced when they leave their jobs. But that is not always the case, and if you have a long list of retirement concerts filled with many expensive tours and activities, you may need more every year than you do now. Being honest with yourself when calculating your retirement needs will help you be as prepared as possible financially.
Finally, don't forget about how Social Security benefits will affect your savings – and how age you require affects how much you receive. Some calculators will factor in social security benefits, giving you a more accurate idea of what you need to save on your own. But the age you claim will affect how big your check is. The only way to receive your full amount is to claim at full retirement age (FRA). You receive less each month if you claim before FRA, and by waiting until after that age (up to 70 years), you get some bigger checks. If you are planning to retire and claim benefits, for example, at age 62, the less social controls may potentially throw off your plans if you are not preparing them.
How to catch up if you are out of track
Many pension calculators will not only tell you how much you need to save when you retire, but also how much to save each month to reach your goal . It makes it easier to tell if you're on the track – and if you fall behind, how much you need to start saving to catch up.
If you find that your savings are out, try making corrections as soon as you can. The sooner you start saving, the less you have to save each month to reach your goal, thanks to the power of the crowd. If you wait until you are just a few years or even a decade away from retirement, you may have to save thousands of dollars each month to retrieve. Begin early, but only save a few hundred dollars a month to reach your goal.
Once you know how much you should save each month, you may need to make some budgeting adjustments to find money. Depending on how far behind you are, you may have to do less tweaks or big victims. Sometimes, cutting just one or two relatively small expenses is enough to reach your monthly savings. If you are serious behind, you might consider retrieving some part-time work or even reducing your home to find extra cash to retire.
If you're behind your savings, it's not the end of the world. The most important thing is to realize that you're out and about making adjustments to get back on track. You do not know what you do not know, but if you do your research and find out exactly what you need to save for retirement and create an action plan to get there, you will be much more prepared for the future. 19659018] fool.insertScript (& # 39; facebook-jssdk & # 39 ;, // connect.facebook.net/en_US/sdk.js#xfbml=1&version=v2.3' ;, true);
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