Money Matters – Boomers Turn 65: How Much Income Will You Need In Retirement?
BOSTON (CBS) – You cannot pick up a magazine or newspaper today without a reference to Boomers needing to postpone their retirement because of the economy. According to a ING survey (3/09)
- Nearly half of all Americans (47 percent) have “no clue” how much money they need to retire;
- 65 percent of Americans have not adjusted their retirement investments to save more
- One in five Americans is still banking on Social Security to be their main source of retirement income; and
Some experts believe you are going to need to have a $1 million dollars for a comfortable retirement.
Experts also say you’ll need between 70-80% of your current income. But it is an old measure they’re using! You really need to try to project how much income you’ll need in retirement.
Most boomers have not saved a $1 million and if you have you are golden. But the reality is that you can get by quite nicely on less. But no matter how much you have saved you need to do some planning.
You start by looking at your current expenses. The closer you are to retiring the more accurate this exercise will be. How much does it cost you annually to maintain your life style?
You want to include your groceries, insurance, transportation, real estate taxes, excise taxes, gas and other expenses. That’s what it costs to maintain your lifestyle today. Now back out any expense you won’t have in retirement such as work clothes, your mortgage for you would like to go into retirement with that paid off, your contributions to your retirement plans, may be school loan payments you are helping the kids with.
Now add in any extra expenses you may anticipate in retirement such as traveling, hobbies and medical expenses. That will give you a number in today’s dollars. Now we just have to figure out what that number will look like in the future.
Checkout the various internet calculators to figure out how much you’ll need in the future and how much more you may need to save to reach your retirement goals. Your retirement plan provider has one you can access on line and the one I use most often is a site; Choose to Save.
AARP also has some good material on their website as well as a retirement planning calculator.
One more thing: So often people get discouraged because after doing the calculations they realize that the dream of retiring early may be just that – a dream. So to make it a reality you may have to change your current life style to save more now or plan to work part time in retirement. Or both! Take the time to find out where you are in reaching your goal of a comfortable retirement.