6
Bury It Now…Enjoy It Later!
Today’s economy is shaking the tails of canines and felines from Main
Street to Wall Street. With higher prices for everything from gasoline
to groceries, chances are saving for the future and retirement may not
be pawticularly high on your priority list—but it should be. Even in a
tough economy, a disciplined savings habit is the best way to reach your
retirement savings goals.
How Much Do You Need to Retire?
Many financial experts say you’ll need 70% to 80% of your annual pre-retirement income (for each year in
retirement) in order to enjoy a lifestyle similar to the one you have now. But will that be enough? The basic 70% to
80% formula assumes that you will save on work-related costs like commuting and clothing, as well as the expenses
of raising children and paying your mortgage. But what if you have healthcare expenses, college tuition bills, credit
card debt, or you’re still paying a mortgage?
Every individual has unique circumstances that will affect their spending. The best way to predict your future and
retirement income needs is to evaluate your personal situation and develop a plan that aligns
with your lifestyle, budget and long-term goals.
Here are things to consider:
• When do you expect to retire?
• How much money will you spend each year?
• How long do you expect to live?
• What income will you have from other sources, like
Social Security?
• What is your expected return from your investments?
• How can you protect your investments from inflation?
Some people will spend more than their
current income during retirement and
some will spend less. We’re now living
longer than ever before, which means
your retirement savings may need
to last 25 to 30 years, or longer. In
addition, Social Security and pension
income (if you have any) may not be
as dependable as it used to be. These
are additional factors to consider when
estimating your retirement income needs.
By taking the time to estimate how much you need to
save based on your target retirement date, income, investments, inflation
and personal circumstances, you’ll stand a better chance of retiring with
your tail wagging.
