BOSTON (CBS) – The youngest of the Baby Boomers turn 50 this year! The newest members of the Over the Hill Gang.
We have been discussing Fidelity Investments savings guidelines to help workers figure out whether they are on track to meet their income needs in retirement based on their current savings. According to Fidelity most workers should aim to save at least 8 times their ending salary in order to meet basic income needs in retirement.
By doing this, the average worker can replace 85% of her pre-retirement income. In order to reach this level by retirement age, Fidelity suggests workers have 5 times their salary saved at age 55.
So if you are earning $60,000, when you retire you should hopefully have $300,000 in your retirement plan at age 55 for your lifestyle to not radically change.
And if you fall into the category that has not saved very much and you still want to retire in 17 years at the Social Security retirement age of 67 what can you do?
Save as much as you can over the next 17 years. Anything you tuck away now will make for a more comfortable retirement. Use your retirement plan at work to start. For example, if you can save $15,000 a year, again not an easy thing to do, and assuming an 8% return you could have close $500,000 in the retirement nest egg at 67. Doable? Not likely!
Consider working past age 67. Look to pay off your mortgage during this decade so you can retire debt free and then use those extra dollars for additional retirement savings. Also consider downsizing your home if the kids are gone. If you make a profit on the sale put that into savings.
Many Boomers believe that they will inherit money from mom and dad so they don’t need to worry about retirement planning. But what I am seeing is that mom and dad are living longer and they are consuming the dollars the kids, those Boomers, thought they were going to inherit.