How Much Should You Be Saving for Retirement?
Will You Go Broke in Retirement?
Recent headlines like “42% of Americans Will Retire Broke” are enough to alarm even the most unflappable among us.
But, with Social Security on shaky ground and the average retirement savings at under $100,000, it makes sense that people would be afraid.
The truth is, everyone has a unique set of physical, financial and lifestyle needs. But, with the number of people who have zero retirement savings hovering around 20% of the population, Americans need to reevaluate their retirement savings strategy.
CreditGUARD’s convenient calculator can help you plot your retirement course.
There’s no guarantee that Social Security will last forever. Relying on the government to bail you out in retirement isn’t a solid strategy, especially if they don’t secure the future of those benefits. Even so, Social Security payouts are only a fraction of the cost of living in an economy whose prices continue to rise from inflation.
If you’re in your 20s, it’s recommended you save 10%-15% of your income for retirement. As you move forward, you’ll want to increase that number. You should plan to live on 70% or so of your pre-retirement income once you’ve retired.
According to the Bureau of Labor Statistics, the average Social Security payment to retired workers was about $1400 per month.
When you consider monthly living expenses alone, most, if not all of that $1400 would go to food, clothing, shelter, transportation and medical care.
What if you retire with debt? How much debt could you afford to pay in retirement? Obviously, the situation gets really uncomfortable, really fast.
Before beginning with a retirement savings plan, it’s important that you plan for the short term by saving an emergency fund. $1000 is a good first goal if you have no savings. From there, aim to save 3-6 months’ worth of living expenses.
So, step one—
How to Save for Retirement Starting Today
Step one is determining your current financial situation. Knowing exactly what your monthly cost of living is will allow you to calculate what is left over and how much of that you can put toward your retirement fund.
Once you’ve made a beginning, the next two steps are to eliminate as much debt as possible and find more ways to save money in the meantime. If you’re behind on debt payments, CreditGUARD can help you manage your unsecured debts like credit cards. Call one of our certified credit counselors today.
The next step is to determine what type of retirement account to open, whether it be a 401 (K), Roth IRA or IRA account (links off to our article on IRA/Retirement accounts).
Beyond contributing to your retirement accounts, the other principle way to grow your nest egg is investing. Whether you own stocks or property, having a diverse portfolio of investments can help accelerate your retirement savings. Before you begin investing in assets beyond your retirement savings, it would be wise to consult a financial planner or wealth management expert.
In the meantime, keep learning, and read more in our Financial Learning Center!
If you’re currently facing an unmanageable debt situation, CreditGUARD can help. Call one of our certified credit counselors today to learn how to deal with your current situation and take control of your financial future.
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The Ultimate Debt Survival Guide. Need some practical advice for dealing with debt? You’ve come to the right place. This free downloadable guide can teach you the basics of managing debt (and more).
Is Debt Settlement a Good Idea? Debt settlement and debt consolidation are not the same. Learn more about the process (and consequences) of settling your debts before going down that path.