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Retired--and still working
MADISON, Wis. (4/11/11)--Are you planning to retire to a life of leisure? If so, you’re an exception. According to the Employee Benefit Research Institute (EBRI), nearly three of four workers (74%) expect to continue working after they “retire” (EBRI 2011 Retirement Confidence Survey). The EBRI survey also asked workers how confident they were about having enough money to live comfortably throughout retirement. In 1993, 73% expressed confidence; this year, only 49% did, a drop from three of four workers to merely one of two. Apparently, that lack of confidence is well founded--more than one-half (54%) of workers admitted to having less than $25,000 in household savings and investments, if any, excluding primary residence and pension. If you’re thinking about retirement--and if you’re not someone’s dependent you should be--the sooner you take action, the easier it will be to reach that goal. Here’s how CUNA’s Center for Personal Finance editors outline the most important steps:
* Calculate the nest egg you’ll need. Use one of the many online retirement calculators--Ballpark E$timate is a good one--to determine how much money you’ll need to provide a certain income at a certain age, given your financial resources. The calculations will only be estimates based on assumptions such as an average inflation rate and an average investment return. However, even a rough projection of your future needs will allow you to set manageable saving and investment goals. * Gather information and advice. Take advantage of your credit union’s staff and educational resources to examine all your retirement and investment options and plot a course of action. There probably will be several different ways to accomplish your goal; the more you know about them, the better the plan you’ll devise. You still might decide that you want to work after you officially retire. But planning ahead will make it much more likely that a post-retirement job will be a rewarding labor of love rather than a survival necessity. * Start now The younger you are when you begin retirement planning, the fewer sacrifices you’ll have to make to accumulate the nest egg that will keep you from having to return to the labor force. For example, let’s say that two workers, one 55 years old and the other 25 years old, each want to amass $500,000 by age 65. Assume that their investments will achieve average annual earnings of 5%. The 55-year-old will have to set aside $38,000 each year to reach that goal, by saving $380,000 total. The 25-year-old, in contrast, will have to set aside $4,000 a year, saving a total of only $160,000.
For more information, read “How to Calculate Your Retirement Needs” in the Home & Family Finance Resource Center.
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