THE RETIREMENT CAFÉ
By Ernie J. Zelinski
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SAVING FOR RETIREMENT
Saving for Retirement "How much money do I need to retire?" is a common question typed into Google. Variations of this question include:
As indicated in my book How to Retire Happy, Wild, and Free, planning for retirement, if and when it is pursued, generally focuses on financial issues. How to save for retirement, surprisingly, is not easy even for many of the high income earners. Recent studies show that Canadians and Americans plan to work way past the retirement age of 65 due to the fact they don't have enough retirement savings. Yet many of these people are fooling themselves. Fact is, two-thirds of Canadians retire before the full Canada Pension Plan/Quebec Pension Plan benefit age of 65, often times involuntarily due to health reasons, having to take care of loved ones, or not being able to find a job. Unfortunately, according to the National Save for Retirement Week website, research has shown that nearly half of all workers in the United States have less than $25,000 in total savings and are saving for retirement very slowly. Even more startling is the fact that slightly more than one in five American workers say they have no savings of any kind.
Why Americans Are Not Up to Par with Their Retirement Savings Billy Boy
Franklin stated, "Americans have mastered the art of
being prosperous though broke." In other words, they have
not saved enough for
retirement.
Most American retirees have very little money and will have no retirement income to speak of because they never learned how to save their cash. The typical 50-year-old American has earned a great deal of money in their life time but according to one financial report, has savings of only $2,300. Hopefully you won't be the average when you submit your retirement letter and start your retirement. The Good News about " How much money do I need to retire?" Particularly if you are a baby boomer quickly approaching retirement, you may be concerned whether you are saving enough for retirement. The good news is that many people may be overestimating how much money they need once they leave the workforce. Several research studies show that people generally spend a lot less as they age. (Even so, this is not a reason to become casual about how much you are saving.)
I along with
well-known actuary Malcolm Hamilton and syndicated
columnist Scott Burns of the Dallas Star
have been saying for years that the 80 percent figure
is idiotic. Common sense says that if a person makes
$500,000 a year that the person does not need
$400,000 a year to retire. In fact, no one needs
$400,000 a year to
retire.
In Chapter 1
of
How to Retire
Happy, Wild, and
Free
, I give
eight good reasons why
the large majority of retirees, whether they live in
Canada, the U.S., or other Western nations, can live
on far less than 80 percent of their pre-retirement
income.
Indeed,
government statistics indicate that retirees live
comfortably on 45 percent to 62 percent of their
pre-retirement income.
For instance, my friend Jim took early Canadian Pension Plan of only $435 a month. This is his total regular income and he has no assets to speak of except for an Airstream trailer and a older car. His income is supplemented by a few hours a week work that he gets from a mutual friend who manages a medical clinic. Jim lives pretty well and is one of the happiest people I know. He does admit that he wishes that he had a bit of money saved for emergencies, however. Another friend George is 65 and collects about $1,450 in Canada Pension Plan and Old Age Security. This is his total income. George lives in a subsidized apartment. Get this: George saves $450 to $500 a month.
The issue of
"how much do I need to retire" is best addressed
by being totally honest with yourself about what are
"needs" and what are "wants."
Let's face it:
All your needs have always been provided since you were
born - otherwise you would be dead! So keep that in mind if
you want to cut your expenses and overheads by following
money tips that can get you
rich.
I recall
talking to an artist who was making only about $1,200 a
month and had to cut back because his income dropped to
$1,000 a month. He told me how he surprised himself that he
was able to cut back and make ends meet when he took a hard
look at what he can do without. So if this guy can cut
back, over 90 percent of Canadians and Americans can cut
back if they stop lying to themselves and others about what
their "needs" are.
Of course I
haven't completely answered the question, "How much should
I save for retirement?" simply because you are the only
person who can answer this. But I should have
answered the question: "Is 2 million enough to retire?"
If you want to
retire happy regardless of your income, then you should
read
How to Retire
Happy, Wild, and
Free
. It gives retirement
wisdom that you won't get from your financial
advisor.
The World's Best Retirement Book helps readers better envision their individual retirement goals, including where they want to live, what they want to do in retirement, their biggest worries, and what they should do when they are still working to ensure that they have a happy retirement.
Learn How to Retire Happy and Earn Your
Retirement Karma Points by Reading The World's Best
Retirement Book!
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