Very few things in life are an exact science and few things are definite. We can’t determine how long we will live, when or if we will need assisted living or what unforeseen expenses will arise in the future. We can’t determine if Social Security will be around when we need it or if the market will make a huge correction just as we are getting ready to retire. But we can take precautions when it comes to retirement planning and saving. We can project an approximate amount that will be needed for future living expenses and take action to do our part to be prepared.
Did you know that about half of families in the United States have zero dollars saved in a retirement account? That’s almost 70 percent of adults that have less than $1000 in a savings account.
Retirement Planning: Ideal Savings Amounts
You could say that retirement is looking a bit bleak for some. So many people, especially the younger generation, think that they will wait to save until they are making more money, but then when they start to make more money, other expenses increase as well.
There never seems to be any “extra” money to set aside. When people make more they inevitably tend to spend more.
With the power of compounding, the sooner you start to save, the better off you will be and the less per month or year you will need to contribute compared to waiting to save later. Here’s a breakdown of what you should have saved at every age for healthy retirement planning
In your 20s: Aim to save 25 percent of your overall gross pay. Just make sure your lifestyle doesn’t exceed 75% of your pay.
- By age 30: Have the equivalent of your annual salary saved.
- By age 35: Have twice your annual salary saved.
- By age 40: Have three times your annual salary saved.
- By age 45: Have four times your annual salary saved.
- By age 50: Have five times your annual salary saved.
- By age 55: Have six times your annual salary saved.
- By age 60: Have seven times your annual salary saved.
- By age 65: Have eight times your annual salary saved.
Fidelity Investments states similar numbers saying a good rule of thumb is to have the equivalent of your salary saved by age 30 and to have 10 times your final salary in savings if you want to retire by age 67.
We don’t live in a perfect world and there are many things that come up in life, like buying a house or having a child. You may have a year or multiple years where you cannot meet your goal. There may be years that you have to save extra to make up the difference, but what is the alternative? Hoping that the government or your children will step in and make up the difference? I don’t know about you, but I would hate to bank on either of those options.
If you can’t meet the amounts listed above, remember that something is way better than nothing. No one can go back, so the best option is to start right now. Any amount of compounding that you can capture should be utilized. Do not get discouraged. Make the most of what you have and start putting something away for retirement planning
Elite Retirement Strategies
Holly Peterson is the owner of Elite Retirement Strategies and former radio show host. She is a professionally licensed insurance producer specializing in retirement planning and safe money solutions. Holly serves all of Idaho. You can find her online at elitelifeservices.org or by phone at 208-252-4345.
Schedule a free consultation today and start building a more secure future.