News from the Finance Office

One of the most important things you need to figure out in terms of retirement income planning is how much you will have to save so you will not run out of cash in retirement. Denver investment advisor and tax attorney Charles Farrell states that instead of accumulating only 70-80% of your income pre-retirement, you should at least have 10 times your yearly salary in savings to ensure that your nest egg will not be depleted while you are still alive.

This figure would mean that a person who makes $50,000 should have a minimum of half a million dollars for his or her nest egg, while a person who makes double the initial amount has to have at least one million dollars. But the big question is: how do you get there?

Farrell says that people are not saving enough money in their retirement savings accounts, and addressing this would go a long way in ensuring ample funds for retirement. He recommends that participants put aside about 12-15% of their yearly paychecks into their accounts while still working. For those individuals who work for companies that provide matching contributions, upping contributions from 3% to triple that percentage is recommended. If you want to retire at 75, you will need to save about 2.5 times your yearly income at 55, and save more than 5 times your yearly salary at 65. These calculations allow the individual to spend 5% of his or her overall retirement funds, with the support of Social Security benefits.

Farrell observes that, despite the financial hardships most Americans experience, increasing retirement savings seems to be more of a willpower issue than simply having inadequate resources to put into savings accounts and investments. Due to the lack of proper long-term retirement planning and discipline, he says that people enter retirement with thrice their annual paychecks in savings, instead of 10 times the annual salary.

Investment Strategies

Farrell also points the finger at Wall Street, which he says promotes investment strategies that are too aggressive for the average American worker. He says that the concept of the down cycle is something that all investors should be aware of, and should take into account when planning how to bounce back from investment losses.

While it is important that people take stock of where they are and where they need to be to have enough money to retire on, they should also formulate realistic and achievable goals. Set these goals with the help of a retirement income planning expert so you do not get discouraged and derailed in accumulating enough cash for a comfortable and less stressful retirement.

About the Author:

Katherine Smith is an author who specializes in financial topics concerning seniors. Puritan Financial Group gives seniors reliable investment options, as well as professional financial advice to help them strengthen their retirement income planning strategy. For more information on how Puritan Financial Group can help you, visit our website at http://www.puritanlife.com

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