People need to save between 10% and 17% of their income if they plan to retire at 65 but are putting away only 6-8% of their income, according to a new study by the Stanford Center on Longevity. That’s only half of what they should be saving.
What percent of your household income are you saving? It’s important to be brutally honest with yourself because a shortfall of the magnitude most Americans will experience means more than just not being able to live the retirement lifestyle you dreamed of. It may mean…
- Having to choose between putting food on the table and the medical care you need
- Not being able to afford to pay for heating and air conditioning
- Having to rely on the charity of your children
- Foregoing travel and even life’s little luxuries
I doubt you worked hard all your life so that you can scrimp and sacrifice just to get by in retirement.
Fully 60% of U.S. households are at risk of not having enough money to make ends meet in retirement – even if they cut back to spending just 75% of pre-retirement levels – according to a 2018 study from the Center for Retirement Research.
The Rule of 25 for Determining How Much You’ll Need to Have Saved
One guideline that is often cited is the “Rule of 25,” which states that you multiply your total annual expenses by 25 to determine how much you’ll need to have saved by the time you retire.
That means if you plan to spend $50,000 per year in retirement, you’ll need $1.25 million saved. If you plan to spend $100,000 per year, you’ll need $2.5 million, and if you want to live on $150,000 a year, you’ll need $3.75 million saved. If your number is $250,000 a year, you need $6.25 million.
But the Rule of 25 isn’t always accurate, and there are other factors to consider when planning for retirement…
Don’t forget to factor in inflation and the fact that the average 65-year-old couple retiring today will need $280,000 to cover out-of-pocket health care costs in retirement that are not covered by Medicare.
And if you or your spouse end up needing nursing home or home health care, you’ll need another $250,000 or so to cover a single average stay.
What can you do if you aren’t saving enough?
It may seem overwhelming and almost impossible to save between 10-17% of your income or to save 25 times your annual expenses. But if you commit to increasing your savings by even 1% or 2% each year, you’ll be surprised by how much faster your nest-egg is growing, and you won’t feel the pinch.
Also keep in mind that you should plan for your money to last at least until you turn 95, to avoid running out of money before you run out of life.
What’s the Best Place to Grow Additional Savings?
Your money has to “reside” somewhere, and here are three key advantages of the Bank On Yourself safe wealth-building strategy:
- It has a 160-year+ track record of guaranteed, predictable annual growth – even when the markets are tumbling – it’s amazing how much more fun and motivating saving money is when you’re not worried that your hard-earned dollars will vanish in the next market crash
- You have control of your money and can access your savings how and when you want – no questions asked and no permission needed
- You enjoy tax-deferred growth of your savings and can take a tax-free income in retirement, under current tax law – taxes you have to pay on your 401(k) or IRA will reduce your income by one-third or more, according to Boston College’s Center for Retirement (that assumes tax rates don’t increase, which is highly unlikely)
It’s not too late to rescue your retirement savings strategy and have confidence you’ll be able to enjoy the retirement lifestyle you hoped for.
Take the first step by requesting your FREE Analysis and Recommendations here right now. You’ll be able to see the bottom-line numbers and results you could have by adding the Bank On Yourself strategy to your financial plan before you decide if it makes sense for you.
You’ll also get a referral to one of only 200 advisors who have met the rigorous training and requirements to be a Bank On Yourself Authorized Advisor and who can answer any questions you may have.
But don’t dilly-dally, because your retirement can easily last 30 or more years, and the actions you take today will determine whether you enjoy a rich and fulfilling lifestyle… or have to scrimp and sacrifice. So click this button to get started: