This week, Craig Siminski, of CMS Retirement Income Planning, shares with us an article offering a simple worksheet to help you calculate a retirement savings target:
It’s difficult to reach a destination unless you know where you’re heading. Yet only 51% of workers or their spouses have tried to estimate the savings they would need to live comfortably in retirement.
To get a start on establishing a retirement savings goal, use the simple worksheet on this page to compare the income you think you will need (or want) with the sources of income you expect.
How Much Income Will You Need?
Everyone’s situation is different, but one common guideline is that you will need at least 70% to 80% of your pre-retirement income to meet your retirement expenses. This assumes that you will have paid off your mortgage, will have lower transportation and clothing expenses when you stop working, and will no longer be contributing to a retirement savings plan.
Although some expenses may be lower, others might increase, depending on your retirement lifestyle. Perhaps you want to travel more or engage in new activities.
Don’t forget to budget for medical expenses. A recent study suggests that a couple who retired in 2022 at age 65 — with median prescription drug expenses and average Medigap premiums — might need $318,000 in savings to cover retirement health-care expenses (not including dental, vision, or long-term care).
This equates to about $12,720 annually over a 25-year retirement. Future retirees may face even higher costs.
Estimate Income Sources
You can estimate your monthly Social Security benefit at different retirement ages by establishing a my Social Security account at ssa.gov/myaccount. The closer you are to retirement, the more accurate this estimate will be.
If retirement is many years away, your benefit could be affected by changes to the Social Security system, but it might also…
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Craig Siminski is a CERTIFIED FINANCIAL PLANNER™ professional, with more than 25 years of experience. His goal is to provide families, business owners, and their employees with assistance in building their financial freedom.
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