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Retirement Roundup: How much retirement savings will you need?

retirement savings

A digest of
timely information and insight about finance, investing, and retirement.

How much retirement savings will you need? Try 16.4 times your salary | USA Today
One of the most challenging elements of saving for retirement is figuring out how much money to sock away for it. While it’s possible to estimate some of your senior living costs, factors outside your control, like inflation, tax increases, and health problems, can render your savings insufficient even if you’ve done a pretty respectable job of building a retirement nest egg. Now when you sit down to estimate how much income you’ll need to retire with, it’s common to calculate that number as a multiple of your ending salary. For example, investing giant Fidelity says older workers should aim to sock away 10 times their ending salary by age 67. But global professional services firm Aon disagrees, and in a recent report, it finds that the average retiree will need 16.4 times his or her ending salary to cover the cost of retirement.

Retired people
share the secrets of early retirement
| MarketWatch
idea of retiring early might sound heavenly, but there’s plenty to learn before
taking the leap. One person asked Quora, in a questions-and-answers forum,
“What is something that almost nobody knows about retiring early?” Many answers were from people
who retired in their 50s, either because they chose to retire or were forced to
leave. A few responses were from those of the “Financial Independence, Retire
Early” (FIRE) movement, where people quit their jobs in their 20s and 30s and
live off of the money they saved while living frugally and investing. The
upshot: Depending on how you prepare, early
retirement can be a blessing or a curse.

Why a Nobel
laureate’s plan to use Social Security to fix retirement won’t work
| Forbes
Prize-winning economist Richard Thaler made a splash recently by slamming
401(k)s and promoting Social Security. It was a bit surprising given Thaler’s conservative
bent. He proposed that the Social Security
get into the annuity business by allowing retirees to direct some of their
retirement savings toward their Social Security balances to beef up their
monthly payments. Thaler wants to solve a problem that all Americans with
401(k) and IRA plan balances face. How do you take $92,000 — the median level of holdings for workers
approaching retirement age — and make it last a lifetime? That is, how do you
avoid outliving your money? Unfortunately, there are three problems with this

do Medicare options factor into retirement plans?
If you have a financial adviser, he probably spends a fair amount of time
talking about the risks you’ll face in retirement. He’ll test for risk
tolerance and discuss how your investing philosophy should change as you age.
He’ll set up an income plan and help find ways to fill any gaps between the
income sources you can rely on and what you think you’ll need for the lifestyle
you want. He may even get into the rising costs of health care — especially
long-term care — and how to better provide for those costs. But what a lot of
advisers don’t talk about, or help their clients navigate, are the health care
coverage options available through Medicare when you become eligible at age 65.
That’s a big omission, considering that in a 2018 online survey by the
Nationwide Retirement Institute, conducted by The Harris Poll, seven in 10
respondents said they wished they better understood Medicare coverage.

X struggling most with retirement readiness and confidence
| PlanSponsor
A recent report, “What
is ‘Retirement’? Three Generations Prepare for Older Age
,” prepared by the
Transamerica Center for Retirement Studies, looked at the retirement outlook of
Baby Boomers, Generation X and Millennials. All generations — Baby Boomers,
Generation X and Millennials — associate retirement with freedom, enjoyment,
and being stress-free. Among those of all ages, 72 percent are looking forward
to retirement. Among Baby Boomers, this is 81 percent. For Gen Xers, it is 70
percent, and Millennials, 68 percent. However, among all age groups, 76 percent
think people in their generation will have a harder time achieving financial
security in retirement than their parents. This is slightly lower for Baby
Boomers (69 percent), but higher for Generation X (81 percent) and Millennials
(79 percent).

for retirement vs. college? There’s a clear winner
Given that the average 2018 college
graduate with loans left school with about $29,800 in student debt (according
to, the urge to shield your
kids from such a crushing burden is probably as strong as ever. The best-case
scenario is that you save for retirement and for your kids’ college fund
simultaneously. But if you’re thinking of putting all or the majority of your
savings towards college costs, resist. There are no scholarships for
retirement. There are no loans. If you’re not setting enough money aside now,
you’ll be out of luck once retirement arrives. And if you look at retirement as
basically being ‘unemployed’ for 20 or 30 years, that’s a daunting, if not
terrifying, prospect. Even scarier? You then become your kids’ problem at some
point. Do you really want to spend retirement living in their basement?

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