Most of us have heard the adage “save 10% of your salary for retirement” while that may work for some it does not apply to everybody. Money needs time to grow through compounding. The longer you wait to start the more you may need to save or even postpone your retirement date.

Assumes 7% return, retirement age of 65, includes Social Security, and 80% wage replacement ratio.

*At age 55 a person will realistically have to postpone retirement until age 70.

A person earning $50,000 annually and saving 10% of their gross pay, $416 per month at a 7% return until age 65 will have approximately $750,000 in retirement savings. A withdrawal rate of 4% will provide $30,000 annually from savings plus Social Security of $12,000 is a wage replacement ratio of 84%. If there is no Social Security, $30,000 provides a wage replacement ratio of 60%. It is best to plan without Social Security if you are younger than 45.

Time plays a very important role in saving for retirement and if you are unable to reach your savings goal look at areas where you can cut expenses or liquidate fixed debt payments to be able to live on a lower income in retirement. Ultimately I recommend you meet with a fiduciary financial advisor to look at your financial situation and present viable options.

Thank you,

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