There is a retirement crisis in America. Social Security is still alive and well (for now, at least), but is by no means enough to cover most Americans' cost of living in retirement. Too many people have little or no savings, and aren't doing anything to change their situation.
The good news is that you can change your situation, even if you think it's too late. Here's what you need to know about where things stand, and what you could do about it.
How much do you need to retire comfortably?
It depends. According to many financial experts, you should plan on needing about 80% of your pre-retirement salary once you retire, including income from Social Security, pensions, and any other savings. And, you may need this income for longer than you think:
Americans know they won't have enough money, but still won't save.
The vast majority of those in the prime of their careers are aware they have a problem with their retirement savings. They're right.
Social Security should be a supplement, not your sole income source.
Social Security isn't intended to be a sole retirement plan, but a supplement to other sources of retirement savings. Still, many Americans end up dependent on it.
Now, I've written about how I'm almost positive that something will be done to fix Social Security, but my point is that you shouldn't leave your retirement security at the mercy of politicians.
When planning for retirement, think about Social Security as you would a small pension from an old job. It's nice to know you'll have that reliable stream of inflation-indexed income for the rest of your life, but it's not enough to support your lifestyle.
Be sure to keep your health in mind.
One of the scariest retirement topics is healthcare. Many younger people assume that Medicare will cover all of their post-retirement healthcare costs, but this is simply not the case.
You've seen the scary statistics, now do something about it.
The good news is that there is still time to do something about your retirement savings situation, even if you think you're too old to have a meaningful impact.
If you have a 401(k) or similar retirem
r and beyond the amount your employer is willing to match -- up to $18,000 for 2016. If you are 50 or older, you can stretch that by an additional $6,000. And, remember that increasing your 401(k) contributions will lower your taxable income for this year -- an added bonus.
If you don't have a plan at work, or simply want more control over how your retirement funds are invested, a traditional or Roth IRA is a great way to save up to $5,500 per year ($6,500 if over 50).
Since we've spent so much time discussing scary retirement statistics, I'd like to leave you with three good ones.
This article was written by Matthew Frankel (TMFMathGuy) and.is brought to you by the Ronald J. Fichera Law Firm, where our mission is to provide trusted, professional legal services and strategic advice to assist our clients in their personal and business matters. Our firm is committed to delivering efficient and cost-effective legal services focusing on communication, responsiveness, and attention to detail. For more information about our services, contact us today! For additional information and free consultation please contact us.
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As a reminder, this Blog Post is for informational purposes only and is not intended as legal or tax advice.