We always tell people to begin planning for retirement early in their careers, save as much as possible every year, and they should be able to sail into retirement once they reach age 65 (or even earlier). But younger people often don’t (or can’t) heed this advice, so many of us are stuck playing catch-up later in life.
If you’re wondering whether you will be able to retire on time, take these steps to assess your retirement readiness.
Take a look at your investments. Seek to gain a solid understanding of your assets in each retirement account, as they stand today. Of course, if you are several years away from retirement, we hope and expect for these assets to grow a bit.
Plug your information into a retirement income calculator. Now you will use the information you learned in the first step. A retirement income calculator will ask you about your assets, your current age, your salary, and your expected (or hoped-for) retirement date.
Review your expected retirement income. Based on the information you entered, the calculator will generate a speculative retirement income from your investments. It might also estimate your Social Security benefits. The calculator should express this total as a percentage of your current income. Ideally, you will retire on at least 70 percent of your current income, in order to maintain a lifestyle that feels reasonable to you. If this number falls above 70, you’re probably on the right track!
Ask yourself if you need to boost this income. If your prospective retirement income falls below 70 percent of your current income, you might need to postpone your retirement date so that you have more time to save and will live off of your retirement income for fewer years. Alternatively, you could start saving more money each year, or find another way to generate extra income in retirement. Many retirees find part-time work to be both personally and financially rewarding.
It’s best to complete these steps alongside a skilled financial planner, who can assess your individual income needs more specifically. Call us for an appointment, and we can help you identify your priorities and help you make a plan to pursue your goals.
Portions of this article have been excerpted from “Am I on track to retire right?” by Walter Updegrave, CNN Money
Content in this material is for general information only and not intended to provide specific advice or recommendations for any individual.