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Have you been thinking about what your retirement will look like – take annual cruises, travel the country in an RV, move into a master-planned adult community or maybe spend the days rotating your favorite pastimes? Have you started saving for your big retirement plans?
If you haven’t started saving, you are not alone. According to the U.S. Federal Reserve’s 2018 Report on the Economic Well-Being of U.S. Households, 25% of adults have no retirement savings or pension. Most people often think more about what they’ll do when they retire than how they’ll save the money it will take to make those plans a reality.
How Much Money Do You Need for Retirement?
Knowing how much money you will need to live on and to enjoy some fun extras, you will first need to calculate all your expenses just like when you created your non-retirement budget. Maybe you will downsize to lower your housing expenses, or you will keep your car and won’t have a car payment, but whatever those expected expensed will be, you need to estimate your annual expenses. Many financial experts suggest you expect to live on 80% of your pre-retirement salary.
Once you’ve estimated your Retirement expenses or are using the “80% Rule”, you should calculate what your Social Security will be and other guaranteed sources. The more income you will get from Social Security and other sources, the less money you will need to take from your Retirement savings. Visit the Social Security Administration here: https://www.ssa.gov/OACT/quickcalc/
The last thing you need to determine is the gap between your anticipated retirement expenses and your guaranteed and how much savings you need. For example, if you need $60,000 annually in retirement expenses and you will get $35,000 in guaranteed income, the gap is $25,000.
How Much Money Should You Save for Retirement?
If you know what your income gap is between your guaranteed income and expected Retirement expenses, now you need you to figure out how much money do you need to invest to meet that gap.
While most financial experts recommend that you save 10%-15% of your gross income to maintain your current standard of living, this is just a guideline and the recommendation if you started saving at age 25. If you are like most Americans, you probably have only saved half of what you need to save for your age group.
Retirement Savings by Age Group
- In your 30s: 1–2 times your annual salary
- In your 40s: 3–4 times your annual salary
- In your 50s: 6–7 times your annual salary
- In your 60s: 8–10 times your annual salary
For example, a 45-year-old making $50,000 a year should have up to $1000,000 in retirement savings.
Retirement Savings Options
Designing the best retirement plan should be an individualized as you are. From 401(k) roll-over options to Individual Retirement Accounts (IRA), McCoy Federal Credit Union is an excellent path to retirement savings
Designed exclusively for credit union members, McCoy Federal Credit Union offers the MEMBERS Financial Services Program to provide various insurance and investment programs that complement traditional credit union savings plans.
Whether you're looking for guidance on just one financial need you want to tackle today, or if you're interested in putting together a comprehensive plan, there is no cost and no-obligation.
To learn more about the McCoy Federal Credit Union MEMBERS Financial Services Program, visit https://www.mccoyfcu.org/resources/investment-services.html