By Robyn A. Friedman
How much money do I need for retirement?
That’s a question all of us should be asking — and not just when retirement is looming. Retirement planning is a continual process, one that should start as early as possible.
“Many of us dream about a financially secure retirement, but sometimes we act as though it will happen by itself,” says Jeff Johnson, AARP’s Florida state director. “Actually, it takes planning and follow-through. You should clearly understand what your financial goals are, how much income you are likely to receive and where it is going to come from.”
Unfortunately, many fail to heed this advice.
According to the Employee Benefit Research Institute’s 2014 Retirement Confidence Survey, only 18 percent of workers surveyed are “very confident” that they will have enough money for a comfortable retirement. Among retirees, only 28 percent are very confident.
More troubling, of those surveyed who are age 55 or older:
58 percent have retirement savings of less than $100,000.
41 percent have saved less than $25,000.
34 percent have saved less than $10,000.
“A lot of people are just not saving enough,” says Anthony D. Criscuolo, a certified financial planner with Palisades Hudson Financial Group in Fort Lauderdale. “You need a very large nest egg to supplement a 30-year retirement because life expectancies have expanded and seniors aren’t just living longer, they’re living more active lives.”
So how much do you need to retire?
That depends on your lifestyle and expenses. Are you planning to take vacations in Europe every year, or do you just want to visit family on holidays? “There is no one magic number,” Criscuolo says. “One person could have 10 million dollars and be at risk of running out of money, and another could have two million dollars and never have to worry.”
While experts recommend that potential retirees sit down with a financial planner to run projections on their income and expenses and arrive at a total savings figure they should aim for, Fidelity Investments offers a simple rule of thumb: Save at least eight times your ending salary to increase the odds that you won’t outlive your savings during a 25-year retirement.
There are plenty of online calculators to help determine how much you need to save. AARP offers one that’s easy to use at aarp.org/work/retirement-planning/retirement_calculator.
—Robyn A. Friedman
Look for the next issue of PRIME, a special issue of City & Shore devoted to readers 55 and over, in print, online and on iPad this fall.