The Employee Benefit Research Institute did a study of how much money people have saved for retirement based on their age.¹ Whether you’re twenty, sixty, or somewhere in between, see how you compare to your peers with savings in an Individual Retirement Account (IRA). Take a look at the age ranges below and the average savings in an IRA for people in that respective age range.
Did you match up with your age group? Maybe. But that’s not the point.
What’s important is whether or not you’re saving enough for you and your lifestyle.
The fact of the matter is that you can’t judge your retirement savings based on your peers, because they may not have the same retirement dreams as you. Say your coworker wants to travel the globe in his retirement while you’re content to relax at home with family. Those are two very different scenarios with very different financial requirements.
Instead of comparing your savings with your peers, compare your savings with your retirement goals and how much they might cost. Here are a few examples of goals and how you can plan for them:
Do you want to explore different continents, now that you’re not chained to a desk? Research trips to get an idea of the costs for such an adventure. Tip: if you look at an all-inclusive cruise to your dream destinations, you’ll get a straight forward amount to save up to, but don’t forget about inflation and the cost of additional items, like souvenirs.
Do you plan on visiting the shops you pass on your way to work? When you’re no longer rushing to punch in your time card, you may take the time to relax in a cafe and walk through the art expo. Look up how much entrance fees cost for local museums and galleries. Tip: don’t forget about senior citizen discounts!
Do you want to see the sights of your own hometown, now that you’re not commuting to the city? Take a quick peek at what your town has to offer and allot a certain amount of savings towards the goal of strolling down Main Street, dining out at a local restaurant, visiting farmers’ markets, or supporting the school’s carnival. Tip: as you add up costs for excursions, consider whether or not you may have grandchildren tagging along.
Now that you have a better idea of what you want to do with your retirement, reconsider your savings. Do you know if you will accumulate the amount you need by the time you retire? The statistics above only refer to Individual Retirement Accounts, which you contribute to on your own versus an account you might have through work, like a 401(k), where your employer might match your contributions.
For an accurate picture of how much money you will have in retirement, you need to consider all of your different sources of income and how they meet or fall short of your needs. When you take a look at your retirement savings, don’t forget to include Social Security and any retirement accounts you might have through your employer.
As you consider each account, ask yourself these questions:
Are you still worried about the state of your savings? Not sure how to answer some of the questions above? Wondering how you can increase your contributions to meet your goals? A Money Coach can help. MSA members can work with a coach who is a retirement specialist, and they can get access to calculators specifically designed for retirement analysis.
Remember, it’s not about how much your peers are saving, but whether or not you’re saving enough for the retirement you want. Work with a Money Coach to make sure you’re on the right track for meeting your goals. Call 888-724-2326 today.
¹Craig Copeland, “EBRI IRA Database: IRA Balances, Contributions, Rollovers, Withdrawals, and Asset Allocation, 2016 Update” EBRI Issue Brief, no. 456 (Employee Benefit Research Institute, August 13, 2018).
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