According to a new report from planners Fidelity Investments, the amount an individual should have saved for retirement is at least eight times his or her last yearly salary.
For example, if you earn a salary of $100,000 in your last employment year before you retire, there should be $800,000 or more stashed away to ensure your retirement years are enjoyed at roughly the same lifestyle level as in pre-retirement. The new estimate suggests you cover 85 percent of your pre-retirement income via savings to retire at age 67, and plan to live to the age of 92. Previous savings guidelines by Fidelity suggested a savings goal of much as 10 times your yearly salary by retirement, but critics found that too unworkable for most individuals.
However, for individual with pensions, it may be financially feasible to save somewhat less than the advised multiple of eight. Workers facing retirement with the cushion of a pension or with a small pension may wish to work longer than age 67; every year you delay retirement, you add to you Social Security benefits. Potential retirees may also explore how they can simplify their lifestyles to closer meet their financial burdens at retirement, such as padding payments to more quickly pay off a home mortgage, and working to pay down debt including credit cards and various loans.
In addition to sound financial planning, taking appropriate tax and estate planning steps is essential.
It is never too early to begin to plan your financial future. Work with an experienced estate planning attorney at Gilfix & La Poll Associates LLP to see what creative and innovative trust and tax planning options are available to best fit your needs.
Michael Gilfix is an estate planning attorney in Palo Alto California and is one of the pioneers of elder law. To learn more, contact Gilfix & La Poll Associates LLP.