“Retirement: Do I have enough money?” This often leads to more questions like, “How much is enough?”
Retirement doesn’t have to be full of questions and dreams dashing away. With a few simple measures, you can assess where you are today and how much you need to save.
Where am I today?
This can be a simple connection to your bank or like most individuals it can be scattered across multiple accounts. You have two old 401(k)s you never rolled over, an individual retirement account and a Roth individual retirement account. Gather all this information to determine how much you have saved at this point in these accounts.
Then do a bit of work to get all these accounts under one house or one advisor. Yes, it’s sometimes painful to wait on hold to get the right paper and get it all transferred, but once it’s done it’s done and gives you a clear picture.
How much do I need to save?
The answer to how much to save really depends on how you want to live in retirement. Some individuals see retirement as an opportunity to reduce their lifestyles significantly while others want to travel the world in style.
Assuming you want to maintain the same standard of living today there are a few general rules to consider.
- The Center for Retirement Research at Boston College – recommends saving 15% of your annual savings in your retirement account
- Per research from Fidelity Investments, your aim should be to have 10x your annual salary saved by the time you retire but these are the benchmarks to hit.
- At age 30:1x your salary
- At age 40:3x your salary
- At age 50:6x your salary
- At age 60:8x your salary
- At retirement:10x
All major financial institutions have savings calculators that can help you figure out the right number for you. Check out several of them to compare because none of them will be 100% accurate. The most impactful thing you can do to increase your ability to meet your retirement goals is to start early. Investing early in your career allows for the magic of growth.