Will I have enough money to retire?
Monday, 17 June 2019
About half of American workers say they are building a large enough nest egg to retire comfortably, including just 16 percent of Gen X workers and 23 percent of Millennials.
According to a recent study only 14 percent of Generation Xers and 19 percent of Millennials say they are “very confident" that they'll be able to fully retire with a lifestyle they consider comfortable.
For many workers, saving for retirement while recovering from the Great Recession and managing the day-to-day financial demands of maintaining a home and family is challenging. But that doesn't mean it's impossible. You can take some important steps now to figure out what you'll need to retire.
Calculate how much you'll need
If you won't be retiring for many years, it may be difficult to figure out how much you need to save. That will depend on the age you retire, how long you live and what you plan to do during retirement. For instance, if you plan to travel a lot, that will be more expensive. If you plan to be retired for 25 years, you'll need to withdraw no more than 4 percent of your retirement portfolio each year in order for it to last. In that case, determine your current annual spending and multiply it by 25. If you spend about $40,000 each year, you'll need about $1 million to be able to safely withdraw 4 percent each year.
Figure out how much you'll have
Don't rely on Social Security benefits to support you in retirement, but think of it as a nice income supplement. The Social Security website offers a free account that allows you to log in anytime and see what level of benefit you can expect by retiring at various ages. Also, if you have a 401(k) at work, take time to regularly check your balance and the account's performance to stay updated.
Determine how much you need to save
If you have a set savings goal, such as $1 million, subtract the amounts you can expect to have in your 401(k) and Social Security accounts. Divide the remaining amount by the number of years you plan to keep working. That's the amount you need to save (or earn through investments) each year.
Reconsider your retirement goals
Saving up enough money to retire comfortably is difficult, but not impossible. Many of today's retirees are staying healthy longer and are choosing to keep working on some level even during traditional retirement years. Think about starting a side gig or working part-time after retirement to continue earning money and reduce the amount you'll need to fully retire.
When you have a goal and a plan for retirement saving, the process seems more doable. Get started with saving and investing on a consistent basis to build the nest egg you'll need to create the retirement you want.
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