Fully 60 percent of U.S. households are at risk of not having enough money to make ends meet in retirement — even if they cut back to spending just 75 percent of pre-retirement levels — according to a 2018 study from the Center for Retirement Research.
People need to save between 10 percent and 17 percent of their annual income if they plan to retire at 65. But a recent study from the Stanford Center on Longevityfinds that Americans are only putting away 6-8 percent of their income, about half what they should be saving.
What percent of your household income are you saving? One guideline that is often cited is the “Rule of 25,” which states that you multiply your total annual expenses by 25 to determine how much you’ll need to have saved by the time you retire. But the Rule of 25 isn’t always accurate, and there are other factors to consider when planning for retirement, Pamela says.
These include inflation and the fact that the average 65-year-old couple retiring today will need $280,000 to cover out-of-pocket health care costs in retirement that are not covered by Medicare — plus another $250,000 if you or your spouse end up needing nursing home or home health care. That’s more than $500,000 you may need for medical expenses alone.
What can you do if you aren’t saving enough?
“It may seem overwhelming and almost impossible to save between 10-17 percent of your income or to save 25 times your annual expenses,” Pamela says. “But if you commit to increasing your savings by even 1 percent or 2 percent each year, you’ll be surprised by how much faster your nest egg is growing, and you won’t feel the pinch.”
What’s the best way to grow savings? Pamela recommends the Bank On Yourself safe wealth-building strategy. For over 160 years, this method has established a track record of guaranteed, predictable annual growth and is not subject to the volatility of stocks and other investments.
“It’s amazing how much more fun and motivating saving money is when you’re not worried that your hard-earned dollars will vanish in the next market crash,” she says.
About: Pamela Yellen is founder of Bank On Yourself, a financial investigator, and the author of two New York Times best-selling books, including her latest, "The Bank On Yourself Revolution: Fire Your Banker, Bypass Wall Street, and Take Control of Your Own Financial Future." Pamela investigated more than 450 financial strategies seeking an alternative to the risk and volatility of stocks and other investments, which led her to a time-tested, predictable method of growing wealth now used by more than 500,000 Americans. Visit www.BankOnYourself.com.
For more information visit her online press kit at www.pamelayellen.
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