In the backdrop of rising healthcare costs, increased life expectancy, many large corporate employers packing up their pension plans, and the future of social security under question, Americans face an increased financial uncertainty. More and more people are concerned that they may not have enough savings to meet their retirement needs. They are also realizing that they are really on their own, when it comes to managing their financial future.
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Additionally, having numerous saving plans and so many types of investment products to choose from, makes the retirement planning a challenging exercise. This section of financial planning provides you the guidance and tools to determine the approximate amount that you would need to save for retirement and your target mothly savings. You will also see a snapshot of various plans and their eligibility and contribution requirements.
As a rule of thumb, save for about 30 years and plan to live in retirement for 30 years. The other rule of thumb is to save 10 to 15% of your gross income towards retirement. Additionally, another 2% of gross income is recommended towards saving for health care needs during retirement unless you carry a long term care insurance....
The following table provides some guidance on the savings rate based on the age when you start saving for retirement and keep the same savings rate till the retirement at age 65. The saving rate is the %age of your gross earnings (before taxes).
Starting Age Range Savings Rate 25 - 35 10 - 13% 35 - 45 15 - 18% 45 - 55 20 - 25% 55 - 65 > 40% and for longer
