There’s a growing concern among our aging workforce that there might not be enough money to retire.
After all, the recession hit everyone pretty hard and if you were only saving the minimum to start with, you might now be wondering if retirement is a dream that’s never going to happen.
But before you throw in the towel, consider this:
In the past, experts suggested you would need between 75 to 85 percent of your existing income to live comfortably during retirement. But that’s not necessary true.
75% of $100,000 is $75,000 for example, but if your mortgage and/or other major debts will be paid off, you wouldn’t need that much to cover your expenses. Likewise, if you’ve got kids living at home or putting some through college, you’re probably spending quite a bit more now than you will during retirement.
Yes, it’s better to have more than you need versus not enough but rather than following a generic percentage recommendation, start looking at your unique financial picture.
What do you pay now that you won’t be paying later? Based on an average return, what kind of income can you expect from your investments when you actually make the retirement leap?
You may find that the gap isn’t as big as you had previously thought.
What if you haven’t saved anything yet?
First, know that you’re not alone. A large number of working Americans in their 40s and 50s have yet to stash away any substantial amount of money. Unwise? Yes, but certainly not disastrous. If you start funneling money to retirement plans now, you can still expect to embrace your retirement without struggling to get by.
Experts suggest saving a minimum of 20% of your pre-tax income starting at the age of 50 to ensure you have enough to live comfortably during your retirement.