Are You Saving Enough? A Quick Guide to a Comfortable Retirement Forget rush hour traffic, the daily grind and working 8 to 5. A much more relaxed life filled with vacations, spending time with your grandkids, and playing golf may await you. Although the joys of retirement seem too far in the future to consider, there is a lot to prepare for right now. Coupled with the departure of the long workday, the steady paycheck disappears as well. Nearly four in 10 workers have not saved anything for retirement. Don't be left behind when retirement arrives. Will you have enough money to live comfortably when you are ready to retire? Here are a few things to consider. What Will You Spend? Will you choose to travel and see the world, or will you enjoy a more relaxed lifestyle close to home? Most experts believe that retirement expenses can be 20 to 30% less than during working years. However, if you choose to live lavishly you might spend more than you do now. Under Planning Central on this site, you'll find tools to help you calculate how to reach your retirement savings goal. Six in 10 Americans have never calculated the amount of money they will need to live comfortable during their golden years. Get ahead of the game now! How Healthy Will You Be? It is also essential to be prepared for emergencies or unexpected illnesses. You might consider purchasing long-term care insurance or catastrophic health care coverage to protect your accumulated wealth. What About Social Security? If you're retiring soon, there is a more definite answer about the amount of support you'll receive from Social Security. In 2004, the average annual Social Security payment was $11,000. However, Social Security payments may not be so secure 10, 20 or 30 years from now after baby boomers strain the system and begin receiving retirement payments. Benefits may decrease for future generations or taxes be raised to compensate. Bottom line, do not depend solely on Social Security. When Should You Start Saving? Even if you seem confused by the process, or it doesn't seem affordable right now, the sooner you start to save, the better. If you're in your 20s, for example, saving early will mean that you can make smaller contributions and let the money grow for a longer period. Compounding is a powerful tool with one requirement — time. The longer you allow your nest egg to grow, the more you are likely to have when you retire. Inflation's Impact Say you have determined your retirement nest egg goal and have started saving. Have you considered how inflation can eat away at your nest egg? Unless your returns keep pace with inflation, your money's value erodes. The best way to combat inflation's effects is by striking a balance between risk and return through a well-diversified portfolio of investments. Remember to compare the inflation rate to the return on your investment for a truer picture of your retirement investment's growth rate. That's the best way to know if you are budgeting wisely for the future. Conclusion For most of their lives, many people view retirement more like a distant dream than a certain reality. It is wise to begin thinking about those far-off years now. The earlier you start, the better your golden years will be. Powell, Robert. "Pick up that calculator. The key to saving for retirement? Number crunching." Marketwatch April 5, 2005. Brokamp, Robert. "5 Retirement Must-Knows." The Motley Fool. http://wwww.fool.com
This is a publication of Russell Investments. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company. Frank Russell Company, whether affiliated or not affiliated with sites linked to this site ("Linked Sites"), is not responsible for their content. The Linked Sites are for the convenience of the user only, and may be accessed by the user only at the user's own risk. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns. First used: August 2005 USI MSL RC 877 |
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