If someone were to tell you that you could no longer work and had to live on your current savings for the next 20 years, could you do it? According to the U.S. Department of Labor, the average American spends 20 years in retirement and needs 70 – 90 percent of their pre-retirement income to survive.
Earlier this summer, USA Today reported that the median savings for people that are 10 years out from retirement is just around $12,000. Don’t put yourself in the situation where you meet with a financial planner, on the brink of retirement, only to find out you have spent your life not saving enough.
- If you’re just starting off in a career, be sure to participate in and maximize your contributions to your company’s 401(k) plan. If your employer matches, be sure to contribute enough to get the highest match you can.
- If you’re within 10-15 years of retirement, start mapping out your expectations. Maybe you plan on being frugal and/or maintaining your current lifestyle, but if you have dreams of grand vacations or other expenditures, plan for that while you can (a recent report showed that the lifestyle people envision post-retirement and the lifestyle they saved for accounts for a $250,000 gap).
- As you near retirement, make sure you have cleared your debts and have assessed your social security collection options.
As the saying goes, “it’s never too late to start saving.” No matter what your age, you can still adjust your spending and saving to better plan for your future. If you need additional resources to help in your retirement financial planning, here’s an in-depth guide from CNN Money and a simple chart outlining age of retirement, years to plan for and how much you should have saved.