Surprising Facts About Retirement
Leave your retirement up to chance at your own risk. Most of us need to be socking away funds for our futures and investing that money effectively. Here are some things you should know:
• Most people are underprepared for retirement. About half of Americans aged 35 to 44 have less than $25,000 saved for retirement, per the 2019 Retirement Confidence Survey. Folks in that boat do have some time to take action, but they should save aggressively, probably aiming to save more than 10% of their income each year.
• It’s important to have a plan for retirement. Determine how much money you’ll need at retirement, and what your income sources will be. Most of us can expect Social Security income, but that’s not likely to be enough. The average Social Security retirement benefit was recently around $1,475 per month, or $17,700 annually.
• Don’t forget to plan for health care costs. A 65-year-old couple retiring today will spend an average of $285,000 out of pocket on health care, according to Fidelity Investments. That’s for expenses beyond what’s covered by Medicare, and it doesn’t include long-term care.
• Many people plan to retire in their mid- or late-60s. But thanks to job displacements or health concerns, most Americans actually retire by 65, making it all the more important to be financially ready. If you retire at 62 and live to, say, 87, you’re looking at 25 years of retirement! (The Social Security Administration notes, “About 1 out of every 3 65-year-olds today will live past age 90.”)
• It’s not too late to improve your financial health. If you can save and invest $10,000 per year for 20 years and your money grows at an average annual rate of 8%, you can amass close to $500,000.
Don’t be afraid to consult a professional for retirement planning advice. You can find a fee-only pro near you at NAPFA.org. You can also get a lot of clear and concise retirement advice by trying our “Rule Your Retirement” service at Fool.com/services.