Saving for Retirement According to Your Age

The earlier you start saving, the better off you will be in retirement. Learn how much you should be saving for retirement according to your age and salary.

Important Points:

0:11 "Let's take a look at if you're in your 20's, 30's, 40's or 50's – what is the game plan here?"

0:22 "Let's say you're 30 years old. You want to have at least one times your salary saved. So if you're making $50,000 a year, you want to make sure you have fifty grand in the bank."

0:30 "Let's jump up to 45 [years old]. You want to have four times your annual income saved. Once you get into your sixties, that's eight times [your salary]; that's a huge number."

0:43 "Procrastination is one of the key components of why people are not necessarily successful."

1:05 "A lot of the time it's just simple arithmetic. How much money do I need to maintain the lifestyle that I want long-term?"

2:00 "That does show why you want to start as early as possible when you're saving."

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• Investment Advisory and Financial Planning Services are offered through Pure Financial Advisors, Inc. A Registered Investment Advisor.
• Pure Financial Advisors Inc. does not offer tax or legal advice. Consult with their tax advisor or attorney regarding specific situations.
• Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
• Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
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• Intended for educational purposes only and are not intended as individualized advice or a guarantee that you will achieve a desired result. Before implementing any strategies discussed you should consult your tax and financial advisors.

3 Things to Consider When Planning for Retirement

So you’re getting ready to retire and have begun to think about all the wonderful things that come with this next stage in life. Before you take that step, there are a few things you need think about. Carefully considering these 3 areas of your future will have a lasting and significant impact on your ability to fully maximize your retirement income.
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Throughout this video I will cover the following things you should consider before you retire. They are:
• Timing
• Financial Decisions
• Lifestyle

Consideration #1: Timing
Timing is critical to your retirement. You may just assumed that as soon as you reached the magical age of your retirement you would walk out of your employment for the last time on that beautiful day, never to return. However you would carefully consider the timing to make sure you are retiring at a time when you will maximize your benefits. Perhaps waiting for another year will net you more in employer benefits or social security income. Maybe if you held on for another 6 months you would hit another anniversary and qualify for a bonus or vesting of stock options.
Consider carefully the timing on making that final decision to walk away.
The second area you need to be aware of with timing is how your decision will impact your ability to take social security. Because social security will be a major part of your retirement income, you need to figure out the best time to take your social security payments. Deciding on if you could work another year in order to delay your social security benefits may result in an increase in your monthly benefit. It would be nice to know these details before you make the final decision to retire.
While we cannot time the market and do not know what the future holds, we should think about the state of the market when we are getting close to retirement. If you were to retire at the end of 2007 and held all your retirement funds in accounts tied to the market, you would have woken up a year later with significantly less in your accounts. To avoid getting in this position you should prepare your accounts and make sure they are allocated in ways that will allow you to participate in some of the upside potential of the market while protecting against downside risk as much as possible.
Consideration #2: Financial
If you’re like most people, most of your thoughts about retirement have centered on financial matters. This is an important area to think about. Here are some of the financial matters you need to consider:
• How Much Money Should You Have: This is the most important thought when considering retirement. If you don’t have enough in your retirement accounts saved up then it makes it super difficult to retire. A good rule of thumb is to have 8-9x your average of the previous 3 years income.
• Reviewing Your Living Expenses: One way to make your money last longer is to review your living expenses and make sure they are in line your your budget. Cutting unnecessary expenses is a good way to know how much you need each month. No need to cut out everything and live a life of poverty, but you should know where your money goes each month.
• Can You Earn Supplemental Income: Now might be the perfect time to begin earning some supplemental income. Start a business, get another job somewhere you really enjoy or learn how to make passive income.
• Pay Down Your Debt: In line with knowing your living expenses is to cut down on your debt. Now is a good time to review the possibility of paying off that credit card or car loan. If you have a chance to take some of your retirement balance and pay off your debt, does that free up a substantial amount of money?
• Re-evaluating Your Insurance Coverage: Any major life change (retirement included) is a good time to review your insurance coverage. Take a look at Life & Health insurance, Property & Casualty (car / home) coverage or any liability insurance.
• Set Aside an Emergency Fund: You should always have an emergency fund, whether you are retiring or not. It is smart to have 6-12 months of current income in an emergency fund. Some people will hold that in cash at their house or just keep it in an account. Either way is fine as you can access it in an emergency.
Consideration #3: Lifestyle
Now that you are retired, you will have a large amount of time on your hands. It is easy to fall into a funk and not know what to do with your time so thinking about your lifestyle before you retire is critical. It is a good time to pick up a hobby, start a new business or spend more time traveling and spending time with your family.

It is also a good time to donate time to charitable causes or local not-for-profits. There are plenty of opportunities abound, you just need to look around.

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