Think about three people you know who are over 50. Odds are, at least one of them isn’t prepared for retirement.
At least, that’s the premise of an article the USA Today recently published, “A third of adults age 50 and over aren’t prepared for retirement1.” Are you one of those adults who’s not prepared for retirement? How can you determine if you’re in that group?
It’s not always easy to determine if you’re on track for a healthy retirement, especially when you may have many years left before your retirement. One useful way to determine if you’re on the right track is to try to have a retirement savings goal in mind.
You can start by looking at your current income and estimate what percentage of that income you’ll need in retirement to cover your expenses. You can use a retirement calculator like the ones provided by AARP.com and Nerdwallet.com to help come up with an estimate.
While calculators can be useful, they may also provide an incomplete picture at times. That’s why you may want to meet with a financial services professional to examine your personal situation to help determine your long-term options. Your financial services professional can help you examine that retirement calculation and find how much you may need to increase your savings.
Once you’ve determined your possible future income needs, you may find that you need to begin saving more of your current income. While this is always easy advice, it can be hard to put into place, especially during times when money is tight. It can be discouraging.
Depending on your situation, you may even be tempted to avoid saving more simply because you feel the situation is too dire already. However, even saving a little today can grow over time. Starting can be as simple as determining where your income is currently spent. Track your spending by dividing it into categories. Creating the lists that detail your spending by category can be an eye-opening experience and you may find areas that you can reduce or adjust to impact your savings.
It may be that you find that you need to take drastic measures to get your retirement savings back on track. Social Security will likely be a part of your retirement income. Your financial services professional can also help you maximize your potential Social Security benefit, and this could help you address your savings deficit, if you have one.
Social Security is a part of many people’s long-term plans, but many people don’t realize how much they may need to supplement their Social Security benefit in order to live a life like the one they had before retirement. In fact, according to the Social Security Administration’s Monthly Statistical Snapshot as of July 2019, the average monthly retirement benefit is just under $1,400. And remember that’s just the average, not a guarantee. Your personal benefit could be very different.
If you take that average monthly benefit and multiply it by 12 to get an annual income figure, you’re looking at less than $17,000 a year. For many people that wouldn’t replace much of their current income. It may seem more like the amount of money that one would make from a part-time job. That is why I believe it should only be counted on to be a part of your monthly retirement income. This is only one component of determining if you’ll be ready for retirement.
Contact a financial services professional — it’s a great way to help you get an idea of what income you’ll need in retirement and how you’ll get there.
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