BOSTON (CBS) – Probably not!
The average 401(k) balance came in at $80,600 at the end of the second quarter of this year (2013) according to a report released by Fidelity, which represents 12.4 million U.S. workers. Younger workers had saved less and older workers more. But although it sounds like a lot, it’s not!
Your retirement savings will play a very big role in retirement; it will make a huge difference in your lifestyle during retirement. The difference could be summed up in where you choose to eat. McDonald’s or the Olive Garden?
If you do retire at age 65 with only $80,000 in your 401(k) and you live to be 85, that $80,000 will only give you about an extra $4,000 in income annually, about $77 a week. That’s barely gas money!
So how much money will you need for retirement? More than you are currently saving! The first thing you need to do is review your budget to see where you can save more. How much does it cost to maintain your current lifestyle? Is this the lifestyle you’ll want in retirement? With a little bit of effort on your part, you will be able to calculate whether your savings are on track to reach your retirement goals.
There are many calculators online that can help you figure out how much more you need to save. Start with the company that is providing your retirement plan at work.
A good link with many different financial calculators on their website is Choose to Save Calculators. Check out their BALLPARK E$TIMATE to see if you are on track. And the large mutual fund companies have good educational retirement sections as well as calculators on their websites. Check out Fidelity and Vanguard for some help.
If you are coupled, try doing the calculations together. If you finish the worksheet and the results indicate that you must save more than is available from your paycheck each week, re-work the calculations retiring later or add part-time work to the equation.