Planning for retirement requires an effective strategy that covers everything, including inflation, long-term healthcare, vacations, debt, the uncertainty of Social Security, taxes, the unexpected and living expenses. What makes it even more challenging is people are now outliving their savings because life expectancy is longer.
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According to a new survey from Allianz Life, 64% of Americans, mostly Gen Xers, worry more about not having enough money to cover their lifetime than they worry about dying. While many fear about running out of money in retirement, only 23% have addressed this concern with a professional financial advisor, per the survey.
“If we knew the date we were no longer walking the Earth, we could plan to have enough money to last so the last check you write in this world goes to the Undertaker,” said Eric Mangold, certified wealth strategist (CWS) and founder of Argosy Wealth Management.
To accordingly plan for your golden years, here’s how much you should have saved if you lived to 100 per Mangold.
There’s many approaches to saving for retirement, but one method Mangold stands by is saving 15% of your income.
“I don’t focus a number and how much to have ready for retirement but one should be saving at least 15% of their income every year towards their retirement,” he said.
Mangold explained the 15% of income strategy should determine how much guaranteed income is going to come in through revenue like pensions, Social Security and annuities.
“How much of your retirement expenses will that cover?” he asked. “If there is a shortfall there, then we can turn to investments to make up the difference.”
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The average lifespan in the U.S. is now 78.4 years, per the National Center for Health Statistics,
however, the amount of Americans living past that age is growing.
“With people living longer, we have to plan for what may be a 30 or even 40 year retirement — that means the income must keep coming in,” Mangold explained. “I use that term income on purpose because it’s not about how much you have saved, it’s how much income will it produce for you and for how long.”
According to Mangold, many retirees don’t have an asset problem, but they do have an income problem.
“It’s imperative that people employ a strategy that puts income in their pocket each month, regardless of how long they live, regardless of what the market does, where inflation is, what geopolitical events are going on, etc.,” he said.
