Save early and save often! Everyone has heard this mantra when it comes to saving for retirement. The more you save; the better off you will be when you retire.
However, how does one really know if he or she is on the right track for retirement? Back in school, we received report cards that let us know how we were progressing in mastering Algebra, Geography, and the like. Similarly, “Saving Factors” can offer guidance on how close someone is to reaching their retirement goals. Saving Factors are multiplied by your current income level to provide a target, or a benchmark, of assets to reach at different milestones on the road to retirement. The factors are based on when you want to retire and how much you plan on spending in retirement. To calculate a Savings Factor, only a few basic numbers are needed: your age, the age you want to retire, and your lifestyle in retirement.
For a more detailed analysis of saving factors click here.
Here are a couple of scenarios to give you an idea of how the numbers play out:
- You are currently 35 years old and want to retire at age 67 with a lifestyle similar to what you have today. To be on track for retirement, you should already have saved 2 times your annual salary. At age 50, your target is to have saved 6 times your annual salary.
- You are currently 45 years old and want to retire at age 65 with a lifestyle similar to what you have today. You should have already saved 6 times your annual salary. At age 60, your target is to have saved 10 times your annual salary.
Want to look at your specific situation? Check out the Savings Factor calculator link where you can enter your basic information. Not happy with the results? There are factors you can control: save more, work longer, and/or plan to spend less in retirement.
As always, your McKinley Carter advisory team is here to help. We can provide a more detailed analysis and create a retirement plan that is customized to your individual situation. Together we can get you on track to a “good life” in retirement.