Today we will talk about retirement savings plan.
Fidelity recently conducted a study on retirement savings and concluded that by age 67, you need to have 10 times your annual income saved. For example, if you make $100,000 a year, you should have a retirement savings plan with a million dollars saved by age 67. Similarly, if you make $250,000 a year, you should aim to have $2.5 million saved by age 67.
But how do you know if you’re on track with your retirement savings plan? Here are some milestones to help guide you. Let’s say you start saving at age 30 and contribute $15,000 annually to your 401(k), including any employer match. If your retirement savings plan is compounded at a growth rate of 6%, you could have around $600,000 in your 401(k) by age 50. By this point, you should have six times your annual salary saved. If you’ve reached this milestone, you’re on the right track to achieving your retirement savings goals.
But what if you’re behind on your retirement savings plan? The first thing to consider is that retirement doesn’t necessarily have to happen at age 67. You could retire later, perhaps at age 68, 69, or even 70, to give yourself more time to save. Additionally, you could save more money by reducing your spending or taking full advantage of your company match. Another option is to delay taking Social Security, as this can increase your income and decrease the amount of savings you need to maintain your desired lifestyle.
If you’re ahead of the game and have already saved more than six times your annual salary by age 50, you may be able to retire early. However, retiring early can be risky, as it may be challenging to re-enter the workforce at the same level of income you had before. One option is to consider doing part-time consulting work or working only six months a year to supplement your income. Additionally, it’s always wise to have some savings outside of your retirement accounts to cover expenses that may arise.
In conclusion, having a retirement savings plan is essential for securing your financial future. Use the milestones provided to assess your progress and adjust your savings accordingly. Remember, it’s never too late to start saving, and even small contributions can add up over time. With the right mindset and a solid retirement savings plan in place, you can achieve your retirement goals and enjoy your golden years with peace of mind.
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