Financial planners often recommend replacing about 80% of your pre-retirement income to maintain the same lifestyle after you retire. This retirement security is important because it can help maintain the cost of living and prevent the purchasing power of retirement savings from diminishing over time. By the time you turn 55, aim to have seven times your current annual salary in retirement savings in all your savings and retirement accounts. A person who retires in the mid-40s will need more money than a person who works longer and retires in the mid-60s.
But how do you decide exactly how much the average American should save for retirement? More importantly, how much should you save for retirement? Elizabeth plans to retire at 67 and her goal is to maintain her lifestyle during retirement, so her savings factor is 10 times. We can determine when your retirement accounts and Social Security payments add up to cover your average monthly retirement income. Saving for retirement may seem like a daunting task, but it's possible to achieve a comfortable retirement income. According to the National Retirement Security Institute (NIRS), more than 75% of Americans have retirement savings that don't meet conservative savings goals, and 21% don't save at all.
In addition to those basic guidelines, experts recommend using a retirement calculator to get a more accurate idea of your retirement number. You start with a lower percentage when you're younger, so by the time you reach retirement age, compound interest will have done its job and will help you achieve a comfortable retirement. As a result, it's essential to have a retirement plan that includes a good mix of sources of savings and income. Whether your plans include a career change or a new business venture, cash savings outside of your retirement accounts can fund your dreams and push your retirement money to the ground.
With a retirement retirement calculator, you can estimate how much you need to contribute to an annuity to retire comfortably. The age at which you plan to retire can have a big impact on how much you need to save and on your milestones along the way.