While we all think about our eventual retirement, it can be difficult to gauge how well we are planning financially. Saving 10 to 15% of our gross income and investing it properly should provide for a comfortable retirement. But, it would still be nice to know where we stand at certain points in our life. A good “rule-of-thumb” when checking your progress is to calculate how much you have accumulated currently compared to your household income and age at the time of calculation.
A good basis to use for these calculations is to measure your progress on your 30th, 40th, 50th, and 60th birthdays. So where should your retirement savings and investments be at these specific ages, with the goal of retiring at age 65?
By age 30 you should have approximately one-half of your household income saved. At ages 40 and 50 the figures should be close to two times and five times your gross income. By age 60, you should have roughly nine times your household income. Meeting these mile markers set you up to cross the “finish line” with the household income target that most financial planners suggest that you have set aside prior to retirement.
If you are reading this article and you have calculated that you are on track with your figures, congratulations. Your existing plan is paying huge “dividends”. If based on your age, your figures are falling short, it may be time to seek advice for suggestions on how best to get your retirement savings back on track. And do not delay in putting a plan of action into place, as time is typically your largest asset when it comes to achieving your financial goals.
by Mark S. Reagan – Financial Advisor
170 Bostwick Road
Oxford, GA 30054