Las Vegas Sun

March 18, 2024

How much savings do you need to retire?

retirees1

Leila Navidi

Talk among Don Shreffner, from left, Cippy Valle and her husband, Aurelio Valle, at the Henderson Senior Center on Thursday focuses on the economy. “I learned at an early age to save and prepare myself,” said Aurelio Valle. “And I have.”

If you’re looking for a foolproof chart or hard, fast rules for retirement planning, you’re in luck: More of those are available on the Internet than you could ever use. The problem is, such generalized calculations don’t always provide accurate information for people who don’t fit into a nice, neat financial mold.

The colorful pie charts and lists provide a guesstimate of how much money you will need to live comfortably during retirement. One common “rule” is you should plan to spend 70 to 80 percent of your pre-retirement salary to survive post-retirement. Unfortunately, those percentages can be too high — or worse yet, too low — for some people.

That’s because they depend on assumptions about the expenses you’ll incur once you’ve stopped working. Many assume your mortgage is paid off and your kids have left the nest, which isn’t always the case. Some investment gurus also may presume you’re no longer socking money away for retirement or that you and your spouse are in perfect health and will stay that way. Obviously, those are rather broad assumptions.

But there are many solid, adaptable tips suitable for just about anyone.

Plan, plan, plan

No matter where you are in your career, you should have a written financial plan that outlines where you stand and sets goals for investments, income, taxes, health care and your estate. A written plan can guide you throughout the year and help prevent emotional decisions. Financial advisers suggest the plan be reviewed at the start of each year, especially by those nearing retirement.

Review your credit report often

Credit reports should be checked at least twice a year. Given the increasing rate of identity theft and fraud, it’s a good idea to know what’s on your credit report even if you aren’t getting ready to make a big purchase.

The Fair Credit Reporting Act allows every consumer in the United States one free credit report a year from each of the three largest credit bureaus: Equifax, Experian and TransUnion. Visit annualcreditreport.com to request yours. The reports don’t include credit scores, but those are available for a nominal fee.

Delay Social Security payments

Though you can start collecting Social Security at age 62, your monthly benefits will be reduced permanently. If you can afford to do it, it’s best to wait until full retirement age to start claiming benefits. If you wait, your benefits will grow 8 percent a year until you reach age 70.

Max out your 401(k) and other contributions

Even if you can’t afford to contribute the maximum to your 401(k), contribute something — at least enough to get your employer’s match if the company offers one. This not only helps you in retirement, it reduces your taxable income while you’re working. The same applies to IRA, 403(b) and 529 plans.

Also, if possible, start saving early to get the most benefit from interest and appreciation. The more you can contribute today, the longer it has to grow.

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