Retirement Planning Savings Guidelines Rules

Guidelines to Keep Your Retirement Planning on Track

Updated on Feb 25 2019


Part of maintaining senior independence is navigating the financial aspects of retirement and staying organized while meeting retirement and financial milestones. Here are top guidelines to make sure your Retirement planning and saving are on track.

February is National Senior Independence Month. As advocacy groups raise awareness on senior independence, it’s important to not overlook the importance of financial independence.

These four guidelines can help you keep financial planning on track and ensure that you have enough set aside for your retirement.

4 Rules to Guide Retirement Planning and Savings

Successful retirement planning takes more than a few clever investments. Dedication to a savings strategy over time and being diligent with spending and a balanced investment portfolio can make the difference between a good retirement lifestyle and a stressful one. Here are four rules to help guide your retirement planning and savings to set your nest egg up for financial success.

1. Save at least 15 percent of your gross income over your entire career.

The first rule of thumb to saving adequately for retirement is to save at least 15 percent of your gross income annually, over the course of your entire career. This savings can include any employer matched investment accounts. However, a 15 percent savings goal is a stretch for many Americans as a survey from Bankrate found that 20 percent of Americans do not save any of their income at all and 65 percent save much less than 15 percent. Strive to save at least 15 percent each year, matched or unmatched by your employer, into a retirement investment account.

2. Accumulate at least ten times your final annual salary.

40 percent of Americans have less than $10,00 in retirement savings. However, financial experts recommend that Americans save at least ten times their final annual salary so that someone who earns $50,000 in their last year of work has at least $500,000 set aside by retirement. This number would include home equity, making it a more attainable goal for homeowners.

3. Limit your withdrawals from savings.

To make ends meet in retirement, try not to withdraw more than 4.5 percent of savings each year in retirement. If you have saved $500,000, you could withdraw $22,500 each year from your investment accounts and have your income supplemented by Social Security. This assumes that retirees are holding assets in bonds and other fixed-income accounts and less in stocks or mutual funds as taking a 4.5 percent withdrawal in a market down year could be extremely detrimental to your retirement accounts.

4. Calculate any income replacement.

Experts recommend that retirees cover at least 45 percent of retirement spending with Social Security covering the other 55 percent, assuming retirees want to maintain their current lifestyle. While you are eligible for Social Security benefits at age 62, to increase Social Security benefits, you can delay taking them until the age of 70 when maximum payment amounts are set. A Social Security Administration study found that nearly 25 percent of seniors rely on Social Security for at least 90 percent of their income, so it’s smart to be savvy about the Social Security benefit rules and regulations.

If you are unsure where you are in your retirement planning, contact a fiduciary financial advisor to get expert guidance. Meeting with a financial advisor can help you understand where you are in your planning, and what you need to do to get where you want to go.

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