Planning for Your Retirement
Now Is The Time To Get Started
After years of hard work, you deserve a comfortable, secure, and rewarding retirement. But it takes planning to reach that goal. A recent study1 found that nearly 60 percent of Americans feel they are behind in saving for retirement. Yet, despite this, the same study noted that nearly 70 percent remain focused on short-term and mid-term spending (everyday expenses, paying for a vacation, etc.) over retirement preparations.
This is unfortunate, since getting a head start on saving for retirement is more important than ever. Americans are retiring earlier these days, and as many as four out of every 10 Americans2 report that they were forced to stop working sooner than they expected due to downsizing, health problems, or family emergencies. At the same time, peoples' life spans are getting longer, thanks to advances in medical technology and health care. With earlier retirements and longer life spans, it is no surprise that many people live for 20 years or more after they retire.
Take Responsibility For Your Future
Unfortunately, the sources of retirement income that previous generations depended on are shrinking. In the past, Social Security and employer pension benefits had been the main sources of retiree income. However, with companies cutting back and the future of the Social Security system uncertain, these sources can no longer be counted on to provide for a comfortable lifestyle.
Also, inflation and income taxes do not stop at retirement. During the 1970s, annual rates of inflation in the U.S. rose to 13% 3. If inflation rates rose again, many individuals could find themselves forced back into the workplace just to make ends meet. Even today's more modest rates of inflation will take their toll over the long haul.
The practical result of all this is that you must take responsibility for making sure your retirement and financial future are secure. You will need more of your own personal savings to retire in comfort, yet have less time to save up the necessary amount.
Working with a First Investors representative is a great first step towards putting yourself on the path to the retirement that you've always wanted. First Investors offers a number of options to help you on your way, whether you're just starting out in life, about to retire, or comfortably settled into your golden years. You can learn more about your options at each stage of life by clicking the links on the left. Our representatives can help you analyze how much money you'll need for a financially secure retirement, then design a customized retirement strategy to help you reach your goals.
Your Retirement Needs Might Be Greater Than You Think
| Examples | ||||
|---|---|---|---|---|
| If your pre-retirement income is | $40,000 | $60,000 | $80,000 | $100,000 |
| Then your target pre-tax retirement income at the time of your retirement should be approximately | $32,000 | $48,000 | $64,000 | $80,000 |
| (Most experts recommend between 70% – 85% of pre-retirement income. Although some costs, such as commuting, work clothes, and savings will likely diminish, many expenses such as housing and utilities will remain unchanged and other expenses such as travel/entertainment and health care may well increase.) | ||||
| To achieve this annual amount over a 25 year retirement, the pre-tax lump sum required at the time of your retirement is | $456,160 | $684,240 | $912,320 | $1,140,400 |
| This amount will have to be satisfied via an employer pension, Social Security, investment income and/or part-time work. | ||||
| And don't forget that, assuming an inflation rate of 3% a year, in 20 years the purchasing power of your targeted pre-tax retirement income will decline to | $17,718 | $26,576 | $34,435 | $44,294 |
1 “Roadblock to Retirement,” Prudential Financial. May 24, 2005.
2 Ibid.
3 Based on Consumer Price Index (CPI) data compiled by the U.S. Bureau of Labor Statistics.
