Retirement is more of a balancing act than a one-and-done decision. You have to know if you’re ready before you actually do it.
Some are well prepared for retirement with ample savings while others are nowhere near where they need to be. Most have a sense if they are ready.
According to a recent study featuring a “National Retirement Risk Index” by the Center for Retirement Research at Boston College (CRRC), “most households in the Risk Index have a good sense of whether they are on track for retirement: 40 percent are in good shape and know it, but 20 percent are in trouble and know it.”
Overall, though, it’s important to note that a high percentage of households may not be prepared for retirement, the Risk Index study found.
“Since the Great Recession, the calculations show that even if households work to age 65 and annuitize all their financial assets, including the receipts from reverse mortgages on their homes, roughly half of households are at risk of being unable to maintain their standard of living.”
Let’s boil this down to three lenses to examine these findings. It’s important to ask yourself these questions:
* Are You Bogged Down By Debt? If you’re not paying off your credit cards every month or still have installment or college debt, that’s going to stymie you from saving. You should be saving more than you are spending each month.
* Are You Not Saving Enough? How much is enough? You should be socking away enough money to cover at least 40% of your pre-retirement income. Don’t forget to calculate Social Security benefits, which you can receive starting at 62. The highest benefit is when you file at age 70. Use this free calculator to estimate your Social Security payments.
* Did You Plan and Calculate Your Retirement Income? This is a basic math exercise based on how much you are spending and saving now and in retirement. I like this calculator from bankrate.com, which takes into account eight different factors.
The bottom line may be a moment of truth for you. Do the math and see where you stand.
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