Young Americans usually don’t start thinking about their retirement savings until it’s almost too late. Because of this, only two out of three US citizens actually have something saved when they reach retirement. Apart from fulfilling your free time with ‘lots of fun stuff’ once you stop working, you also need the dought to cover your expenses. While Europeans are generally spared from healthcare in their elderly years, US retirees are usually also burdened with significant healthcare expenses. This is a serious concern for Americans, with a Gallup survey report finding that 3% of Americans personally knew someone who died because they couldn’t afford and therefore receive the medical care they knew they needed.
This infographic illustrates just how much money you’ll need to retire and much more. Yes, it’s one focussed on Americans, but a similar story goes for many Europeans. It also includes tips to get you to start saving. In this article, we will take a look at it and try to explain why you need to think about your retirement savings right now and not waste any time leaving it for later. Read on!
When Do People Usually Retire?
There are roughly around 50 million retirees in the United States. The average retirement age is 62, and approximately 90% of Americans retire by the age of 66. The life expectancy in the US is 79.3 years, with women living longer than men. By looking at each state, people from Hawaii and Minnesota tend to live the longest (over 81), while Mississippians have the shortest life expectancy of all (75).
So, after you retire, you are looking at another 20 years of life for which you need to save up. You should adjust your savings according to your income and your desired standard of living. But, no matter what your retirement plans are, you still need to save on time.
When Should I Start Saving?
As we mentioned before, one-third of all retirees have exactly $0 saved for retirement. Additionally, over half of the US population has less than $10,000, most of whom are Millennials. In order to avoid being one of these people, you must start saving on time. Around 50% of US citizens start saving for retirement after they turn 36, although the ideal age to begin is before 30.
By the time you are 30 years old, you should have saved the amount equal to your annual pre-tax salary. Every five years, you should add one more salary to your savings, and by the time you’re 67, you should have 10 annual pre-tax earnings. Also, make sure to take inflation into account.
The Most Popular Savings Goals and Plans
How much money people need for retirement depends on their income and their desired standard of living.
In any case, many people suggest the “multiply by 25 rule,” which estimates how much money you will need post-retirement by multiplying your desired annual income by 25. Once you’ve retired, you can also implement the “4% rule,” which suggests that you withdraw to a maximum of 4% out of your savings for each year of your retirement.
When it comes to saving up, many experts advise that at least 10% of your gross earnings should be the starting amount for your retirement fund. The 401(k) is one of the most popular savings plans in the US, as almost 78% of workers use it.
There are many other retirement plans that you should consider, and you can check the comparison between them in the infographic below. Enjoy!