Will you be ready to retire?
Check if your savings are on track with your retirement goals.
Whether your retirement goals are extravagant or simple, check in on your savings to see if you are on track to support that lifestyle.
How do I know if I'll be ready?
Taking these steps can help you determine if you're on track to make your dream for retirement more of a reality.
- Determine how much you may need. Think about how you want to spend retirement and how much it costs. According to the Employee Benefits Research Institute, 53 percent of employees have not calculated how much money they need once they retire.*
- Determine your savings target. That 53 percent also hasn't figured out how much they may need to save annually to help reach their goals. Here's a good guideline. "I tell people to save 10 percent of what they make over their lifetime," says Stephen Desrochers, CFP®, first vice president of wealth management at UBS.
- Get guidance. Have a financial professional take a second look at your savings, investments and other sources of retirement income. "It takes 20 minutes once a year to sit down and see if you’re on track to retire," Desrochers says.
What if I'm not on track?
If your current savings doesn't align with your retirement goals, Desrochers offers three tips to help in meeting your goals:
- Save more. Desrochers promotes the 1 percent rule. "Raise your savings rate by 1 percent every year," he says. Automate this increase, if possible. Also review your day-to-day finances to figure out where your money goes. You may see opportunities to save more.
- Work longer. Brainstorm ways to continue earning money while enjoying retirement such as working part-time. "This gives you more years to save and fewer years to draw down savings, plus it can put you in a better position for Social Security," Desrochers says.
- Expect less. This is a last resort, and one you shouldn't have to take if you stay on top of your savings progress. "Getting to your retirement is possible," Desrochers says. "It's about buckling down and saving money."
Monitor your progress.
Find out if you're on track to meet your retirement savings goal with the help of the My Principal® Edge Milestones retirement planning tool.
* EBRI Retirement Confidence Survey, March 2013