Retirement Savings Facts you Should Know About
Retirement is something that all of us (hopefully) will enjoy at some point. As such, everyone should have a plan in place for saving toward retirement. To better understand how to plan for that milestone, here are some retirement savings facts you should know about.
Age Plays a Factor
Women who retire at age 65 will on average need enough savings to last them another 20.6 years. Men require slightly fewer funds-just enough for the next 18 years or so.
Future generations might not need to stretch their retirement funds quite as long. Full retirement age is currently 66; however, it will increase to age 67 for those born in 1960 or later.
Seniors must account for health care costs regardless of their life expectancy or when they begin drawing funds. The average 65-year-old retired couple should plan to spend an additional $275,000 on health care. This does not account for the cost of a nursing home or other long-term health facility.
Disappearing Pension Plans
At one time, corporate pension plans were very common. Even so, information derived by USA Today from the Employee Benefit Research Institute shows that such plans might be disappearing. Currently, only 13% of workers in the private sector are contributing to a pension plan. That is a significant drop from 1979, when 38% of private-sector employees participated in a pension plan.
Some economists claim that fewer people now have access to an employer-sponsored 401(k) or similar retirement plan. Among low-income households, only 35% have access as compared to around 80% of all high-income households.
Income from Many Sources
Retirees these days are not relying solely on Social Security income alone. Over one-third (34%) are still in the workforce or are self-employed. Another 20% are drawing from pension or savings plans, while 9% have assets from income.
Fidelity advises clients to replace 45% of their pretax earnings with savings. Along with Social Security, this should be sufficient for anyone earning between $50,000 and $300,000 annually. To maintain one’s lifestyle, Fidelity claims it is only necessary to replace between 55% and 80% of annual earnings.
Millenials are Better Prepared
Surprisingly enough, millennials are preparing themselves for retirement quite well despite having unprecedented amounts of student loan debt. A survey performed by Bankrate shows that 60% of all millennials have cut spending in an effort to save more money. Concerns about their job security and the economy were thought to have influenced savings as well.
The increased savings means that millennials now have more money saved than their parents did at the same age. In 2016, families with a head of household younger than 35 had an average of $12,300 in savings. In 1989, that same family would have had only $7,500 in savings (after adjusting figures to account for inflation.)
There’s no better time to begin retirement planning than right now. Use the facts listed here along with information from your financial planner or retirement specialist to come up with a plan that is just right for you.