If you are concerned about your financial future, you are not alone. Many people have heard unpleasant stories about senior citizens running out of money in retirement and being forced back into the workforce in their elderly years or having to move in with their adult children. Such events happen every day, and you understandably want to have a sizable retirement nest egg so that this does not happen to you. You may be wondering how your current nest egg stacks up to the competition, and a closer look can help you to determine if you are on track. At BMG Money, we work hard to assure our customers have a sound financial future. A few key pieces of expert advice could make you feel better about where you stand.
What the Experts Say
Before you compare the size of your retirement account with your peers, it is important to understand how much money financial experts think you should have at certain stages in your life. For example, by age 40, the average citizen with a median income of $67,000 per year should have at least $100,000 saved in a retirement account. By age 50, this same worker should have more than $212,000 in a retirement account. In addition, the worker with a median income level should have at least $260,000 by the age of 60. This final figure may not seem like enough for an individual to retire on, so it is important to consider how much money you need through your own estimates and calculations.
What Your Peers’ Finances Look Like
Now that you have a better idea about how much money the experts say individuals should have by a certain age, it can be enlightening to look at real statistics regarding your peers’ finances. By age 40, only 20 percent of individuals have actually saved the recommended $100,000. Only 22 percent of 50-year olds and only 26 percent of 60-year olds have reached their milestone levels. As you can see, if you are falling behind on your retirement savings efforts, you are not alone, and you may be wondering what you can do about it.
What You Can Do If You Have Fallen Behind
It is easy to feel stressed and anxious when you are falling far behind on your retirement plans, but now is the time to put those emotions aside and to take action. Time is on your side when preparing for retirement, so make retirement savings a priority. Readjust your budget so that you can invest more money into your retirement account. When you receive raises, bonuses and refunds, contribute these funds to your retirement account. Remember that you can always extend your retirement age by a few years, or you can plan to work part-time in retirement. Keep in mind that you may also receive income from a pension, Social Security and other sources.
How You Can Reduce Your Debts
When planning for retirement, remember that you only need enough income to pay your regular bills. With this in mind, it makes sense to focus on reducing your debts as much as possible. By doing so, you will need to generate less income to live on. Create a plan to pay off all credit card debts before you retire. If possible, pay off your home mortgage before you retire. It is also wise to have a reliable car in good condition that is paid off before retirement, but remember that you likely will need to replace the car at some point while you are retired. This expense should be planned for.
Comparing your financial status to others is common, but remember that the primary goal is to save enough money so that you can live comfortably after you quit working. Each individual has a different lifestyle with unique financial considerations to keep in mind, and this means that you will need to create your own retirement budget and financial plan for the future. Use your own financial planning efforts rather than a peer comparison to determine if you are on track to reach your retirement goals.