The Center for Retirement Research at Boston College has released an important benchmark on saving. They imagined a typical American couple that began saving at age 25 and retired at age 62. They figured up how much such a couple would need to save in order to maintain the same standard of living they had before retirement.
Their total may surprise you. This couple would have to save 15% of their income.
How many Americans save that much? According to LIMRA, only 15% of middle-income Americans save 10% or more. Almost half of these working Americans save 5% or less. 22% of all respondents save nothing.
That means that when you look at any four retirees, the averages would suggest that one might be fairly comfortable, two may be a little worried, and one may be relying entirely on Social Security.
The New York Times gives even more dismal figures. According to their information, two of those four retirees could be looking forward to poverty in retirement.
What action should you take in light of this information?
If you’re around 25, you should be socking away 15% of your income for retirement. That can be tough to do at a time in your life when you might still be paying off students loans (or even still adding to them), getting married, starting a family, buying a car or a house, or starting off your career.
However, it’s easier to get in the habit when you’re younger. Once you’re in the habit of saving, you’ll probably find that it’s easier than you expected.
If you’re nearing retirement age and you haven’t been setting aside those funds, it’s time to get serious about your retirement planning. Call Mach 1 Financial group today, or set an online appointment for a free retirement analysis.