Something we all think about and are faced with on a regular basis….retirement. Whether you are pondering what island you will settle on or fantasizing about retiring at the ripe age of 50, you definitely think about it from time to time. What are the most common topics you see around the subject? For me there are a few, one is the climbing age of retirement due to the vitality of the human body. Another is the ability to retire when it is financially feasible, IF it is ever really financially feasible. I suppose another topic that is focused on for people in my generation is whether or not we will have enough or any help from social security when we reach the time, which is another reason to start thinking about the future now.
Ok, I know this is not the most upbeat topic, but it is definitely something that we all need to think about, and now. According to cnnmoney.com, “While most Americans predict they will need a nest egg of $300,000 to live on for 19 years in retirement, the average savings of 50-somethings is only $29,000, which comes out to an income of $190 a month over 20 years assuming a 5% rate of return”. I don’t know about you, but I highly doubt that would even come close to covering costs at any age! According to this savings calculator, I would need to save at least 10% of my current gross annual salary to be able to retire at 65 with 80% of my pre-retirement income. When you think about it 10% does not seem unachievable. But let’s factor in the car payment, mortgage, student loans, credit cards, and so on, now 10% is not exactly spare change.
When it comes down to it what you really need to have is a plan. The article indicates that, “according to the survey, only 33% of Americans have a detailed written retirement plan and 37% don't know how much they will need in retirement or how long they will be able to live on what they have saved”. Financial advisors, while costly in most cases, are worth the money. You are dealing with someone with expertise in the field. They do this every day and have more knowledge about the industry.
So what do you need to do? Create a plan, save more, work as long as possible, and retire in Fiji, right?! Right! (Well that’s my plan anyway!)