How Much Will You Need To Retire?

From Pension Benefit Guaranty Corporation.

The best time to start thinking about and saving for retirement is always right now.

While that's true for everyone, recently there's been a steady flow of stories about twenty and thirty-somethings to get them ready for life after work.

That's because the estimates for how much a 20-year-old needs to save go as high as $7 million.

For some, the enormity of the task has paralyzed them into inaction, while others view themselves as highly disciplined money managers - a trait discussed in a recent report by Time.

There are many in the financial planning community who advise starting a savings plan with at least 10 percent of your yearly income. But for a generation with competing financial concerns like rent, car payments, and student loans, it's too easy not to save now for a need that's decades away.

And for those over forty, with children to raise and older parents to care for, meeting saving goals can be just as challenging.

But no matter what your age, there are practical tools that can help define your retirement needs. For example, visit the Department of Labor's lifetime income calculator. For those of you with a 401(k)-type plan, the calculator will create an estimate of your monthly income based on your current account balance, and on the projected value of the account upon retirement age. Even for those without a 401(k), it is a good idea to start saving for retirement by putting money away each month into a savings account. The DOL calculator tool can give you a sense of how much you should put away so that you will have sufficient lifetime income after you retire.

No comments: