Saving for retirement and planning ahead is essential, and those who save enough could wind up with a million dollar nest egg.
“When it comes to saving for retirement, what I typically advise people is you want to save enough money so that it hurts,” said Forst Elliott, a financial planner at Edward Jones in Moraine. “If you are in your 20s or you are in your 30s saving $50 a month, it’s no big deal. But if you’re saving $200 a month or $300 a month, it is closer to a car payment and you’re like, ‘Wow that kind of hurts.’ Then then you know you are making a concerted effort to save.”
Many companies offer 401(k) retirement accounts, and people can set up their own Individual Retirement Account (IRA) or Roth IRA.
A a person who started saving for retirement at 45 will accumulate $207,000 by age 65, assuming they saved $5,000 a year, earned an annual 6.5% rate of return and made no early withdrawals, according to a report released in May by Edward Jones, a national financial services firm, in partnership with Age Wave and The Harris Poll.
But if that same person had started saving that amount at age 25 they would have $935,000 by age 65 or $1.3 million if they retire at age 70, the report said.
“Financial foresight is the gift that keeps giving,” the report said.
Retirees who reporting having a high quality of life are more likely to have taken several specific actions, including having retirement accounts, reducing debt, investing assets and working with a financial advisor, according to the report.
The report also found that concerns related to financial issues dominated a survey of U.S. retirees and pre-retirees aged 45 and over. Asked to list three things they worried about the most, 49% said physical health, 34% the cost of health care/long-term care, and 32% each for unexpected expenses and economic conditions, according to the survey released in May. Twenty-six percent are afraid they’ll outlive their savings.
A majority of those surveyed anticipate continuing to do some level of work after retirement, although 41% said the ideal approach is to never work for pay again.
“We expect these trends to continue and possibly grow,” the report said.
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