In order to live a comfortable life after you stop working, it’s important to build up retirement savings. Many people aren’t sure exactly how much money they need, and each person’s or couple’s requirements will differ based on a few important factors. Financial advisers usually recommend anywhere between $1 million to $1.5 million in savings. This can be a daunting number for people, but reaching this number is possible with careful planning and budgeting.
Cost of Living in Retirement
How much money you need to save will be highly dependent on your cost of living during retirement. Traditionally, people downsize and lower expenses after they stop working, but this isn’t true for everyone. People who want to remain living in a high-demand area and keep up their luxurious lifestyle may need to maintain 100% of their pre-retirement income when they stop working. For those willing to cut back on some expenses, having about 80% of your work income is acceptable. Remember, these are numbers that you’ll need to adjust for inflation.
How long you’re going to live is another important part of the retirement savings equation, and many people live longer than they expect to. Statistics show that in a healthy, upper-middle-class couple, there is a 43% chance that at least one person will make it to age 95. Your goal should be to save enough money so that you can live off of the interest earned year after year. With a self-sustainable retirement income, you won’t have to worry that you’ll outlive your savings. Fluctuations in the market will happen, but the stock market has a long history of mostly steady growth over an extended period of time.
It’s normal to be concerned about your ability to save up enough money by the time you retire, but you should never give up on your objective. Due to the way compound interest works, you’re likely to see your savings double every ten years. If you start saving early, you can earn a huge retirement nest egg relatively quickly. If you start relatively late, you’ll still likely see good enough returns to build up healthy retirement.
With all of this in mind, it’s never too early to start planning for retirement. Heritage Bank offers both Traditional and Roth IRAs as a part of a full range of financial services aimed at making your retirement as comfortable as it can be. One of our professionals at your local branch can help you plan now to have the retirement you want waiting for you.
To find out more about IRAs with Heritage Bank, contact a Customer Service Representative at 770-478-8881.
As the Business Banker for Henry County, Dodie Cason is passionate about serving local businesses. Working directly with business owners and professionals; she is diligent in her desires to find solutions that save time and money, build financial stability and simplify banking processes. You can count on Dodie to serve you with a friendly smile, a compassion for your needs and a commitment to excellence.
AVP, Business Banker • 770-515-7209 • [email protected]