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In 1940 Today
There is a new factor affecting those nearing retirement age: we are living longer! Americans can still dream of their golden years, they’ll just need to make some changes to be prepared for the “New Retirement.”
That means it’s important to have a solid plan for funding your retirement years.
In fact, the sooner you start closing your retirement funding gap, the better.
A good rule of thumb is to put 10% of your earnings into a retirement savings fund (401(k) and/or IRA).
Most people will need about 80% to 85% of their preretirement earned income to fund retirement expenses.
A 65-year-old man typically lived to 77.7 years old
A 65-year-old woman typically
lived to 79.7 years old
The average 65-year-old man today can expect to live until age 84.3
The average 65-year-old
woman today can expect to live until age
86.6
65-year-olds today will live past 90 1/4
THE NEW RETIREMENT
WE ARE LIVING LONGER
If you don’t think you have enough for 20 or 30 years, it may be necessary to step up your savings or consider postponing your Social Security payments so you receive a higher monthly amount later on.
IT’S NEVER TOO SOON TO START SAVING
It’s best to think through how you want to live in retirement and develop a budget.
Once you’ve estimated all of your expenses, add some for unexpected needs and contingencies.
Remember, it’s not wise to count on luck or an unforeseen windfall to carry you through retirement.
The most significant expenses for retirees include:
Other expenses to consider are generally more discretionary:
These four categories can consume about
housingtransportation
travel apparel education charityentertainment
food & beveragehealth care
BE REALISTIC
To accumulate assuming an average annual investment return of 7%
For example:
27 years old needs to invest
37 years old needs to invest
47 years old needs to invest
57 years old needs to invest
$5,000
$10,600
$24,400
$72,400
$1,000,000 67by age
per year
per year
per year
per year
80%of after-tax
retirement income
For resources on saving for retirement and making funds last, visit www.picpa.org/moneyandlife.
Source - Social Security Administration
8444/15