New survey says $1M is not enough for retirement
For most retirees, saving $1 million for retirement has been the standard goal, but a recent survey is now saying that may not be enough.
LINCOLN, Neb. (KLKN)- For most retirees, saving $1 million for retirement has been the standard goal, but a recent survey is now saying that may not be enough. Tim Kulhanek, local financial professional with Stonebridge Insurance and Wealth Management, is sharing how much we should be saving and how to catch up if we’re falling behind.
How much should people be saving?
- A recent survey shows you need at least $1.9 million to retire now. There are “rules of thumb” out there regarding savings goals, and saving $1 million for retirement is one of them. However, that rule hasn’t kept up with inflation or the fact that people are living longer in retirement.
- The exact amount you need depends entirely on your individual situation and your desired lifestyle in retirement. If you want to know if you’re generally on track to retirement, here are a few savings milestones: By age 30, save the amount of your annual salary; At age 40, you should have 3 times your annual salary tucked away in retirement savings; You should have 6 times your annual salary saved at age 50; At age 60, your goal should be 8 times your annual salary; And at age 67, you should aim to have 10 times your annual salary in retirement savings
How can we reach our retirement savings goal?
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- In 2022, the IRS announced that you can contribute $1,000 more to your 401(k) than in years past. Yet, 17% of workers don’t contribute to an employer-sponsored retirement account. For those that do, 17.5 million miss out on the full match.
- Kulhanek recommends contributing 10-15% of every paycheck to your 401(k). If you can’t manage that, you need to be contributing at least enough to get the company match.
- One of the most efficient ways to save for retirement is to make automatic contributions directly from your paycheck into your 401(k) or other retirement accounts. This will make it less tempting to spend.
- It’s also important to increase your savings over time, which can also be automated. Consider contributing an additional 1-2% annually or every six months.
- A small increase will not be very noticeable from your paycheck but will make a big difference. If you want to run the numbers, Kulhanek has a retirement calculator on his website, https://stonebridgeiwm.com/
- Do not withdraw from your account before you need the money in retirement. If you withdraw from your 401(k) before age 59 ½, that money will be taxed as regular income, and you will pay a 10% penalty.
- There are a few exceptions to early withdrawal penalties. I recommend consulting your financial professional if you’re considering taking money from your 401(k).