How much money do you really need to save up for your retirement and are Americans really meeting this goal? According to a recent GoBankingRates survey that involved over 4,500 participants, 56% have $10,000 or less in savings, 28% aged 55 and up have none, and about 75% overall are falling short of their retirement savings goals.
Experts say that in order to retire and live a high quality life, you’ll need at least 70% of your preretirement income. This requires, typically, 25 or more years to accrue the needed savings. If you are not able to meet this 70% requirement, you will not be able to live the same lifestyle as you did before retirement.
So what is the right amount of your current income that you need to set aside in order to retire in style? Most experts agree that this is about 15%. Bear in mind that this is 15% of your pretax income, something that financial advisors say you should start saving in your early thirties. If you do this, then you could have at least $500,000 set aside by the time you retire.
Of course, this is based on you earning at least $45,000 per year, and is factoring in a modest 2.5% raise each year. Factoring in retirement investments with return rates of 4% and higher, you’d be able to meet this marker in most circumstances.
So how well prepared are you for retirement? Well the current odds look rather bleak at the present. Leading experts say that two out of three people won’t retire these days and will continue working into their golden years.
According to an Edward Jones study, 45% of workers in the US don’t even have a retirement savings account setup, meaning that they have nothing set aside for the latter portion of their life.
According to Franklin Templeton, 55% of workers already have plans to keep a part-time job and continue working during retirement.
If you have not started saving yet, wisely consider doing so. It’s also helpful to know that if you are paying into a home that you own that you can always consider tapping into your home equity via a reverse mortgage later on, should you find that you are short of meeting your retirement goals.