Most Americans simply don't save enough for retirement.
Nearly half (45 percent) of
working-age households don't have any retirement assets, according to the
National Institute on Retirement Security. Of those working-age households
close to retirement (age 55 and older) nearly two-thirds have less than one year's
worth of their annual salary in retirement savings.
The goal
So how much do you actually
need to retire comfortably? There are many variables to consider, including
retirement age, available pensions, and investment return assumptions. Mutual
fund broker, Fidelity, estimates you need enough savings to replace roughly 85
percent of your pre-retirement income. Many experts estimate you will have to
save between 8 and 12 times your pre-retirement annual income to reach this
goal.
But the amount you need depends
on when you plan to retire. For example, Fidelity estimates a person planning
on retiring at age 65 will need to save 12 times their pre-retirement income.
By delaying retirement by just five years, to age 70, your savings estimate
lowers to 8 times your annual income.
This may be why an increasing
number of Americans plan on delaying retirement or working during retirement. A
majority (51 percent) of workers surveyed in 2016 by the Transamerica Center
for Retirement Studies said they plan on working during retirement.
Some ideas to consider now
These are sobering realities,
but there are actions you can take to be in a better position during your
golden years.
1.
Contribute as much as possible every year to your
employer provided retirement plans. With a 401(k) pretax retirement plan, for
instance, up to $18,000 can be contributed each year, or $24,000 if you are age
50 or older.
2.
Contribute as much as possible to a Traditional or Roth
IRA every year, up to the $5,500 maximum, or $6,500 if you are age 50 or older.
3.
If available, contribute as much as possible to a health
savings account (HSA), which can be used to offset medical expenses, up to
$3,400 a year, or $4,400 if you are age 55 or older.
If you'd like to review your
tax-advantaged retirement strategy, call (518) 798-3330 to schedule an appointment.
