If You Retire Tomorrow, Can You Afford It?
With average life expectancies rising every year, the amount of money needed to retire is only increasing. Before retirees can start enjoying their retirement, they should ensure their savings could sustain their standard of living for decades.
If you had to retire tomorrow, would your finances be able to handle it? For many of us, the thought of retirement seems far off. According to the Employee Benefit Research Institute, 40 percent of individuals are not forecasted to have enough funds to retire.1 One of the most difficult things about preparing for retirement is knowing how large your nest egg needs to be.1 Will you live for 10, 20, 30 or 40 more years after your retirement date? Since no one can predict the future, most prospective retirees have to follow a few basic rules of thumb.
Play it Safe
Before you can retire, you should have at least 15.7 times your current annual pay available for retirement income. Social Security should provide a part of this figure, so you really need to have 11 times your current salary in a retirement vehicle such as an IRA.1 If you plan on retiring tomorrow, you likely need to have this figure already saved up. In order to reach this figure, you should be at double your current salary at age 40, four times your salary at age 50 and six times your salary at age 60. 1
As retirement creeps closer, you should save at least 11 to 15 percent of all of your paychecks each year.1 Using employer matching programs or contributions can boost this figure, but you still may need to add your own portion.1 Keep in mind you may need to save more than 11 times your current salary if you are a high-wage earner.1 A lower percentage of your income should be replaced by Social Security if you are in a high-income bracket, so plan accordingly.1
To learn more about retirement income call your financial professional. You’ll be informed about retirement income options and which plan may be best for you.
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