If you’ve ever balked at the results you’ve gotten from a retirement calculator, you need to be taking your future more seriously, according to financial professionals.
In a USNews.com Money article
, several experts said many Americans need to get more serious about saving for retirement, regardless of age.
According to the National Institute on Retirement Security, 45 percent of working-age households have no retirement savings at all. Among people 55 to 64, average household retirement savings total only $12,000. For those near retirement who have savings, the average balance is $100,000 – still not much money to finance the next 20 to 30 years.
“If you look at the way people actually behave, we’re in serious trouble,” says Liz Weston, personal finance columnist and author.
Retirement calculators, which allow you to plug in numbers based on your accumulated savings and your goals, can be great tools to help you figure out how to get to your version of a comfortable retirement, the experts say. The calculators are also great illustrators of the power of compound interest and the impact you can have on your savings by starting young.
Compound interest rewards early savers. Each $1,000 you save when you’re 25 will grow to more than $20,000 by the time you’re 65, at an 8 percent annual return. Each $1,000 you save at 35 will grow to only $10,000.
Once you figure out where you’d like to be, here are some ideas to help you get there:
Cut your budget now to boost your savings
. Look at where you spend your money and calculate where you can cut back on expenses. If you’re fully funding your retirement accounts, save for a house, vacation, your children’s college education or unexpected problems that might crop up down the line.
Put retirement savings ahead of your children’s college educations.
Don’t raid your retirement funds to put your children through college, and don’t borrow to pay their tuition. They will have plenty of time to save and pay back any loans.
Delay drawing Social Security.
Each year you delay drawing Social Security after age 62 adds about 8 percent to your benefits. You can maximize monthly benefits by waiting until you’re 70. For some, it pays to live off savings to delay Social Security. “You can’t get guaranteed returns like that anywhere else,” Weston says.
Get started now to figure out your plan of attack for retirement. Here are some free calculators
(including retirement, rate of return, investment property and more) to help you get a clear picture of your journey ahead.