BOSTON (CBS) – You are officially old once you reach your 6th decade. If you thought 50 was tough they tell me 60 is ten times worse.
At 60, retirement is so close you can actually taste it! But you have not saved enough and you know unless you win the lottery there will never be a million dollars in your bank account, what are you going to do?
We have been discussing the Fidelity Investments 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.
So if you are earning $60,000 when you retire you should hopefully have $480,000 saved for retirement for your lifestyle not to change radically. Are you on track?
If you said no, what can do you do?
Start with putting money into the retirement plan for the next seven years. A couple may be able to tighten their collective belts and contribute $10,000 or more a year to their retirement plans. Assuming an 8% return in seven years you could have close to $100,000 in the nest egg.
It truly is never too late to start saving for your retirement even if you are planning to retire in seven years or less. The reasoning behind that statement is that you are not going to use all of your retirement nest egg the day you retire.
You will be drawing upon it over your retirement years and if you have contributed the money to a qualified retirement plan such as a 401(k) those dollars are still working for you tax deferred until you begin to withdraw them.
There are other things you can do if you have not saved enough. Choose to work past age 67, either accruing more Social Security benefits or if you collect at 67 save your Social Security check, downsize your home, lower your standard of living.