In a recent article in the New York Times, workers from across the country were interviewed about their retirement savings and asked, “How much money is enough?” The majority of the answers came back in the high million-dollar range, $65 million, $20 million, $10 million, with the more modest figures coming in between $5 and $6 million. Good gravy, those are big numbers!
More and more Americans are finding it harder and harder to save with obstacles such as student loans and credit card debt and numbers like these as the goal. How much do you really need to save in order to be happy? If you’re getting a late start, it might not be as hard as you think to build a nest egg big enough to keep you happy.
1. You may not need as much money as you fear.
What if the idea that you need $10 million in order to retire happy is wrong? Director of Retirement Planning at Texas Tech University Michael Finke shares his research findings with the CFA Institute about retirement satisfaction. He’s concluded that once you reach the $3.5 million point, a shift occurs. When you accumulate more than you can realistically spend during your lifetime, you become a wealth manager in addition to being retired. Wealthy people only spend about $20,000 more a year than those who aren’t wealthy, and that extra money has no bearing on your daily happiness, according to a 2015 research paper.2. You can save more money than you think.
What’s stopping you from saving more money? Most of us have bills, debt, and the fun things that we want to do, yet according to a 2015 Retirement Confidence Survey, 69 percent of workers say they could save $25 a week more than they are currently saving. If you’ve already got a modest nest egg of $50,000 (which is half the average for U.S. households over the age of 55), then guess what? Assuming an 8 percent interest rate and 40 years of growth, that extra $25 a week (or $300 a month) would get you a nest egg of just over $2 million, which is $310,867.80 MORE dollars than you would have saved without that extra $25 a week.3. Retirement happiness isn’t just about wealth.
The Center for Retirement Research at Boston College published a paper in 2005 that examines what makes retirees happy overall, aside from just the money. The research found that money was only a small part of it. Having good health was the most important factor, and staying active and involved in relationships lead to greater overall satisfaction. If you’re not healthy enough to do what you want during your golden years, then you won’t be as happy during retirement no matter how much money you’ve saved. So, take care of yourself.4. Your money doesn’t stop growing once you’re retired.
The average U.S. life expectancy has been going up and some experts even think that babies being born today will live to be 120. How long will you live? According to the Stanford Center on Longevity, most people underestimate how long they’re going to be around. It’s our lifestyle choices that lead to a longer and better retirement. One choice that has been proven to lead to greater retirement happiness is getting a guaranteed income. When you have your money in a guaranteed product such as an annuity, the rest of your wealth can still grow and your income continues whether you live to age 83 or 103.5. Having a choice matters.
Health and Retirement Studies also reports that if you enjoy your job, the health benefits from working go far beyond the paycheck. Working longer because you want to save more isn’t a bad thing, as long as it’s your choice. Retiring early because you are forced to, however, leads to greater unhappiness, and married couples who are retiring should talk to each other about what they both want. The bottom line is that you should decide what feels right to you and then go with a plan that fits your goals. Whether you’re just getting started with saving today or already looking to retire, this is YOUR SOURCE for free retirement income planning feedback – no pressure, no sales agents, just good, solid advice. And that’s our promise.
