I always read columns on many magazines and financial shows on finding your retirement number. This number is always into the hundred thousand or million dollar amount for your retirement. This number is based on certain criteria so a retiree will live comfortably. For a person who has no mortgage payment, a small amount of debt, no credit card or personal loan. That individual with a pension/401k plan and Social Security would not need the high dollar number that is always brought up. What is your input on that? That is my position I will be upon retiring in 5 years. Thank you.
You’ve hit on one of the problems with retirement numbers. There is no one-size-fits-all. But here’s the general idea. Calculating the amount you should be saving for retirement is a matter of figuring out how much it will cost you to live in retirement (roughly 85% of what it costs you to live now), then determining how much you’ll already have coming in from other sources: Social Security, pension plan, and your 401(k) (which you should draw down at no more than 4% annually). Your retirement number is how much you need to fill that gap. One of the more comforting things we’ve learned in recent years is that for average earners (people with household incomes of $55,000 or $60,000 annually), Social Security and the amount they’ve been able to save will go further than we thought to fill the gap. For individuals who earn more, however, and therefore live larger, Social Security won’t go as far. And many of them haven’t saved enough. Where do you fit into this picture? That’s a question you can really only answer by using a retirement calculator – try the one here — or getting help from a financial advisor. Good luck!