Still, there are rough guidelines you can follow to prepare for a happy, healthy retirement:
- Your savings target should be around 80-90% of your pre-retirement income
- Your annual withdrawal from your retirement savings should be 6% or less
- Know your assets. Take inventory of your 401(k), IRA assets, potential inheritance income, insurance policies, investments, real estate value etc.
- Don't take Social Security benefits (if in the U.S.) into account, as these are better conceptualized as a supplemental source of revenue rather than a main retirement funder
- Start early! Experts recommend planning as early as in your 20s. While many of us may be getting later starts, this is a valuable piece of knowledge that can be passed down to children and grandchildren
- Use a retirement calculator to assess your financial security based on various variables including tax rate, life expectancy and rate of return on savings. The AARP has a great retirement calculator that you can access by clicking here
Many financial advisors recommend creating multiple plans to account for various situations, such as needing long-term medical care for yourself or a partner or needing to make a major purchase such as a new car or roof. Further, financial plans should be viewed as dynamic-they should be reassessed every few years and updated to reflect any changes.
On a related note, it is important to increase awareness around fraud as seniors are one of the highest risk groups for financial abuse. The Certified Financial Planner Board of Standards' Financial Self-defense for Seniors provides a wonderful overview of "financial self-defense" with specific information on how to identify and avoid scams.
Do you have any retirement saving tips?
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