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Eighty six percent of citizens have little confidence in their retirement plans or indeed, no plan at all. Many have no idea how much they should be saving to ensure some degree of financial stability in their retirement.
Retirement planning can be difficult – a ‘one size fits all’ approach will not work. Everyone is in a different financial situation and retirement planning is difficult, perhaps even impossible for some individuals on low incomes. This is why getting good financial advice is essential – there are aspects that should be taken into consideration by everybody.
It is estimated that only 14% of Americans are confident that their retirement planning is sufficient for the lifestyle they would like to enjoy in retirement. It is also estimated that 60% of workers have less than $25,000 in their retirement plan. With more than 35% of people expecting to retire after the age of 65 is reached, thinking ahead is essential.
Surveys indicate that around 50% of retirees spend much less than before they ceased paid employment, with only 13% of individuals spending more in retirement than they did while working. That is understandable, as many extra costs are incurred whilst in employment, such as commuting expenses. That should be taken into account when retirement planning.
There are online calculators to help those planning for retirement get a rough idea of what figure to aim at. Some will look at current income while others focus on current expenses.
To save as early in life as possible is the best option, and financial planners recommend saving between 10 and 15% of salary, however, those taking retirement planning very seriously should set a monetary target to establish just how much will need to be saved to meet it.
It is important to remember that retirement planning is not something done just once. It needs to be reviewed regularly to ensure that the target is still within reach at a certain level of investment. Doing this on an annual basis, retirement planning can be altered as necessary to keep pace with the changing financial situation. Monetary inflation is the worst enemy, however, purchasing stocks and real estate can reduce its effects.
Financial experts are suggesting that around $15 and $20 may be needed in savings for each dollar of any shortfall between income and expenses. For example, if social security and pensions are not enough to cover expenditure in retirement and the shortfall is around $20,000, it is necessary to hold between $300,000 and $400,000 in a fund.