Retirement goals are important at any age, but they become even more critical once you reach retirement age. How much should you save for retirement? What kind of lifestyle do you want after you retire?
The average American worker has less than $1 million saved for retirement. And according to a recent survey, only half of Americans say they have a plan for their retirement.
You don’t have to wait until retirement age to start saving for retirement. In fact, starting early can give you a head start on saving for retirement. This article offers some suggestions on how to get started.
How Much Do I Need To Save For Retirement?
There is no magic number that says exactly how much money you need to save for your retirement. But there are several factors to consider when determining the amount you will need to save. These include:
Your current income level
If you currently earn an annual salary of $50,000, then you may be able to afford to contribute up to 15 percent of your earnings toward your retirement savings. On the other hand, if you make $100,000 per year, you might be able to afford to put away 20 percent or more of your pay into your retirement account each month.
Your retirement age. When you reach retirement age, you must begin taking distributions from your 401(k) and IRA accounts. Depending on your situation, this could mean that you take as little as 5 percent of your total portfolio or as much as 50 percent.
Your investment strategy
Some people choose to invest in stocks while others prefer bonds. There is no right answer here; it depends on your risk tolerance, time horizon, and financial needs.
Your health
Many experts recommend that you set aside enough money to cover medical expenses during retirement. This includes long-term care insurance and out-of-pocket costs like copays and deductibles.
Your family situation
Do you have children who depend on you financially? If so, you may want to factor in child care costs when calculating what you need to save for retirement.
Do you expect to live longer than expected? If so, you might want to adjust your retirement savings goal downward.
As you can see, there are many factors that go into figuring out how much you need to save for a comfortable retirement. It’s not easy to predict how much money you’ll need.
Long-Term Care Planning is Key
In addition to planning for your future finances, you also need to think about your long-term care needs. Long-term care insurance (LTCI) can help provide coverage for nursing home costs, assisted living facilities, and adult day care services.
LTCI is typically purchased through annuities, which means that premiums are paid over a period of years. However, LTCI policies can be purchased with cash value, which allows you to use the policy proceeds immediately.
It is important to note that LTCI policies do not cover all types of long-term care. They generally cover skilled nursing facility stays, but not custodial care at home. Also, LTCI policies usually exclude certain conditions such as Alzheimer’s disease and dementia.
The advantage of early long-term care planning as one of your retirement goals is that you can build a nest egg that covers both your financial and long-term care needs throughout your lifetime.
Start Saving Now!
While it’s never too late to start saving for retirement, most experts agree that you should start putting away money now. Even if you aren’t yet ready to retire, setting aside money today will allow you to enjoy a higher standard of living later in life.
Experts also agree that the earlier you start saving for retirement and long-term care needs, the better off you’ll be. Start by contributing 10 percent of your income to your retirement account. Then, increase your contribution amount gradually over time.
Long-Term Care Insurance is an important part of any retirement plan because it helps protect against unexpected health problems. While you can’t control everything, you can control your own actions. So, start saving today for a secure retirement tomorrow.
At Healthbridge Health Insurance Solutions, we work closely with our clients to ensure they receive the best possible advice regarding their healthcare choices. We offer a wide range of products including Life Assurance, Income Protection & Critical Illness Coverages. We believe in providing quality service and excellent customer support. Our aim is to make the process of buying health insurance simple and stress free. Call us today!