How Much Income Will You Need In Retirement?
BOSTON (CBS) – Boomers are a hot news topic. You cannot get on the internet or pick up a magazine or newspaper today without an article about Boomers. According to a ING survey -
- Nearly half of all Americans (47%) have “no clue” how much money they need to retire
- 65% 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
Some experts believe you are going to need to have $1 million dollars saved 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 $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 lifestyle? Write it down, no guessing.
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 at work has a calculator you can access online and the one I use most often is at Choose to Save.
AARP also has a retirement planning calculator and some good material on their website.
More: The major mutual fund companies, Fidelity, Vanguard and T Rowe Price also have calculators as well as good information on their sites. T Rowe Price has also added a Social Security Benefits Evaluator.
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 lifestyle 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.