At sixty, this piece suggests the optimal amount you ought to have put towards retirement savings.
At sixty, this piece suggests the optimal amount you ought to have put towards retirement savings.
Crafting a retirement plan can be a complex endeavor, particularly in figuring out how much to save. Variations in cost of living, life expectancy, and desired lifestyle can significantly impact your savings goal.
Unequivocally, there isn't a universally applicable answer as to how much you should have saved by a specific age. A 2024 report from the Transamerica Center for Retirement Studies unearthed that the median amount baby boomers anticipate needing to live comfortably post-retirement is $600,000. However, 21% of those surveyed envisioned requiring $2 million or more, while 24% estimated needing between $100,000 and $500,000.
Ultimately, each person's needs differ, making it difficult to pinpoint a universal number for individuals to aim for. On the flip side, certain fundamental guidelines apply to most individuals approaching retirement age.
As you turn 60, you should consider hitting certain milestones.
1. Determine your retirement savings goal
The most effective method to ascertain your ideal savings figure is by calculating your retirement fund requirement. Initially, estimate your yearly expenditure upon retirement.
Typically, you'll require approximately 80% of your pre-retirement income per year following your exit from the workforce. Assume, for instance, you're currently earning $70,000 annually; you might need around $56,000 annually in savings after retirement. From there, employ the 'rule of 25,' multiplying your annual savings requirements by 25 to uncover your overall retirement savings objective - in this case, $1.4 million.
While such guidelines can aid in furnishing a rough estimate of your savings needs, the more precise method would be calculating your potential expenses in retirement. Not every individual will likely incur reduced expenses upon retiring. If you expect to deal with costly health issues or have plans for extensive travel, for example, you might spend considerably more annually than you do now.
After approximating your future expenditures, utilize a retirement calculator to secure a more accurate picture of your savings target. By assessing this number several years before retirement, you can ensure you're progressing accordingly while you still have ample time to prepare.
2. Assess the role of Social Security in your plans
Social Security serves as an additional income source for numerous elderly individuals. However, it's crucial to maintain a realistic perspective regarding the extent of your reliance on your benefits.
The average retired worker garners around $1,922 per month in benefits, according to September 2024 data from the Social Security Administration. Review your specific benefit amount by perusing your Social Security statements online.
Regardless of your eligibility for retirement benefits, these statements will present an estimate of your future benefits based on your actual income. By incorporating this figure into your strategies, you'll have an easier time determining how much you should save independently.
3. Consider a flexible retirement timeline
By age 60, you generally have a pretty good sense of when you intend to retire. Yet, it might prove beneficial to have an alternative plan in reserve in case life throws an unexpected challenge your way.
66% of baby boomers aim to work until the age of 70, as per a 2024 report from the Transamerica Center for Retirement Studies. Meanwhile, only 34% have a contingency plan if they're forced to retire early.
Of course, nobody can foresee whether they'll face unforeseen challenges such as job loss or health issues. However, even if you'd like to continue working later in life, it might be wise to consider retiring earlier than anticipated to add an additional layer of financial security to your retirement.
In summary, crafting a retirement plan is deeply influenced by your individual circumstance, and there's no one-size-fits-all strategy for saving. By methodically preparing based on your unique requirements, you can position yourself for a more financially secure retirement.
To supplement your retirement savings, you might want to explore various income streams beyond your retirement fund. Consider exploring opportunities for part-time work or retirement-related jobs that offer flexible schedules, as these can help top up your income.
In addition, it's essential to manage your retirement savings wisely during retirement. Effective retirement finance management involves creating a budget and regularly monitoring your expenses to ensure your savings last as long as possible. This may involve adjusting your lifestyle to match your income or exploring cost-saving measures.