Since the outbreak of COVID-19, more than 22 million workers have sought unemployment benefits because of shutdowns with millions more filing daily, creating a record-high total that reflects a major shock to the U.S. labor market. Some may be forced to consider an unscheduled retirement.
If you’re close to retirement age or thinking about retirement, even if it’s just to consider where and when you want to do so, getting as much information as possible is essential. Retirement planning isn’t a one-stop-shop operation and doesn’t only mean getting financial advice from a professional. Knowledge is power, whether that means doing research on your own or getting trusted advice from a financial advisor.
According to data, over two-thirds of Americans have left the full-time workforce by the age of 66. By 75, almost 90 percent have left the workforce. But when is the right time for you to hang up your proverbial (or literal) tools, and call it a day? Is it all about age, or is it about energy and skills? How can you tell if you are at a good time to retire — whether you’d planned to do so now or not? Even more importantly — can you afford to retire now?
When it comes to age and retirement, there are a few factors that must be taken into account. For one thing, some people may not want to retire early. The work they do sustains them emotionally, spiritually, and physically.
Where artisans and artists, or even high-powered corporate types, feel fueled by their work and the sense of purpose it gives them, they choose not to retire early. For them, their work is not only a driving force, but a challenge and an enjoyable pursuit. Early retirement is not a favorable consideration.
However, if you fall into the category of wanting to know when you can retire and pursue other things, then you should know what the stats say about how much you need to save.
According to Fidelity, you should save 10 times your annual salary if you want to retire at age 65. Let’s do the math on that. If your annual salary is $100k you should have $1 million saved.
Unfortunately, the reality for many American families is that they just don’t have enough saved to retire, even if they wanted to. The Economic Policy Institute (EPI) says that the average retirement savings of American families of working-age (between the ages of 32 and 61) is $95,776. This sounds like a significant sum, but in fact, the statistic does not stand up to the challenges of real-life, as there are families who have absolutely nothing saved.
45 percent of U.S. workers have nothing at all saved, and this includes 40 percent of Baby Boomers! 20 percent tap into their 401k early as a loan or withdrawal.
If you want to know what age to retire, you should figure out when you want to retire, and try and figure out how much time you have and how much you must save. The hard truth is that if you don’t save, you probably won’t be able to retire — or if you do, it won’t be enough to sustain the lifestyle you lead. How early you start and how much you contribute, makes all the difference.
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.
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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.