Preparing for Retirement
In a recent survey, it was found that almost three quarters (74%) of pre-retirees think they should be doing more to prepare for retirement, and 40% have no idea what to do. While 24% think they will need $1 million or more to fund their retirement, 54% of pre-retirees have less than $150,000 saved.
The truth is, there is no “magic number.” How much you need to save for retirement will depend entirely on your spending habits. Even someone who saves $2 million will run out of money in retirement if they spend extravagantly and don’t adhere to a budget. Whereas someone who has only $500,000 might live comfortably if they have a lifestyle that does not require much cash.
The single biggest financial regret of Americans is waiting too long to start saving for retirement. By putting off saving for retirement the clock is ticking against you with every day that passes.
When you get there, if there is a shortfall, there are still some things you can do to counteract this, including working part time or staying employed past the age of 65. This will allow you to delay Social Security benefits. By using retirement savings to enable delaying Social Security benefits increases projected retirement incomes by up to 6%.
The reason delaying the start of Social Security benefits increases your projected retirement income is that the increase factors Social Security uses to adjust your benefits (called “delayed retirement credits”) are generous to retirees. So, many older workers will get a really good financial deal from Social Security if they can delay the start of benefits as long as possible.
IMPORTANT DISCLOSURES
Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.
To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law.
Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.
These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable– we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.
David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.
Member FINRA & SIPC.