If you’re like many Americans, you probably think you won’t have enough money to retire at the age you’ve got in mind. A new survey by Legg Mason says that unless you’ve got about $2.5 million packed away in a retirement account, you’re probably right.
The average American has about $385,000 put away for retirement, which is significantly short of the $2.5 million target set by the investment management company. This does help explain why Americans are working later into their careers. It also may explain the interesting statistic that in the last decade people between ages 55 and 64 started companies at a higher rate than those 20 to 34. Surprised? I was too.
Before you go into panic mode, every retirement is different. Fidelity estimates most people require about eight times their ending salary (what they make during their last working year) to increase the chances that their savings will last during a 25-year retirement. And while most people spend lavishly in the first few years of their retirement, if you’re worried about running short of funds later in life or unexpected healthcare costs, it’s a smart idea to come up with a financial plan on how to manage your funds when you actually are retired.
The moral of the story? Keep saving for retirement, and spend carefully!
- On March 19, 2015