How can I tell if I’m saving enough for retirement?
Hi, I’m Rachel Sanborn, Lead Financial Planner for Ellevest. The best thing to do is to home in on exactly what you want your life to look like, so you can personalize the retirement amount that you're aiming for.
How to find your number
A great way to do that is with a retirement calculator. Look for one that shows you how much to save per month starting today, because knowing that is much more useful than just knowing the lump sum you need before you retire.
The Ellevest retirement forecast tools that help with this calculation aim to get you to 90% of your pre-retirement income. If you live off less than what you make now, you might be able to bump this forecast amount down. Otherwise, 90% is a pretty good place to start. It's actually higher than what other firms may suggest that you save.
We forecast a higher amount, because we aim to give you a cushion for any market bumps along the way, and we also take into account that women live longer than men, so we likely need to save more. Our recommendations will show you if you’re on track given the info you've shared with us.
Think of it as a compass
What does on track mean? You may have heard a very rough rule of thumb that you should have one times your salary saved for retirement by age 30, and three times by age 40.
Now, if that just gave you a heart attack, don't worry. Really, don’t worry. Those numbers can feel totally out of reach for a lot of us, but really, they’re like a compass. If you’re pointing off track right now, that means you’ll do some more planning and make some more decisions, little by little, until you're pointing the right way.
These recommendations might not work for everyone. If you’re already living on less than 80% of what you take home, you might not need quite that much set aside. On the other hand, if you live off most of what you take home, you might actually need more than that, and you'll need to think about that.
Zoom in as you go
So, how to do that? When I talk to people, I usually recommend you either retire a little later or you save more now, and we'll have a conversation about what makes sense for you. Often, it’ll be about adjusting your fixed costs, like cable and internet, your phone, and gym membership, to bring them down and give you more room to save.
Your retirement goals are going to keep changing until you actually retire. At first, you’re looking at the 20,000-foot view. Get started. Keep going. Point that compass. Then, once you get closer to retirement, that’s when you zoom in on the specific steps that get you to your goal.
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