Retirement Planning 101: How to Save 10x Your Income By the Age of 67

Retirement planning may be a daunting task, but it is an essential one. The financial security of your old age depends entirely on how much you are saving for retirement in your youth. As such, the most common question on our clients’ minds is: "How much do I need to save for retirement?" Of course, the answer is not as simple as the question. With a multitude of factors to consider, a sound retirement plan is not easy to draft, but it is our bread and butter.

We utilize an age-based retirement savings plan that is easy to understand and easy to implement. While it is unfeasible to follow any financial plan to the T, our strategy can serve as aspirational goalposts to help you save enough to live a comfortable life post-retirement. Our retirement planning strategy is based on the following goals and, sometimes, assumptions:

• Saves 15% of their income annually beginning at age 25
• Invests an average of at least 50% of their savings in stocks over their lifetime
• Retires at age 67 and plans to maintain their pre-retirement lifestyle in retirement.

Our recommended, age-based milestones can help you stay on track while saving for retirement, which includes savings of at least 1x your income by age 30, 3x by 40, 6x by 50, and 8x by 60.

Your personal savings goal may be different based on factors such as when you plan to retire and how you want to live in retirement. For example, delaying retirement beyond the age of 67 can lower your savings factor. The longer you postpone your retirement, the more time your savings get to grow. You will also have fewer years in retirement, so your Social Security benefit will be higher. Additionally, if you expect your expenses to be lower in retirement with reductions such as downsizing, your savings factor may be closer to 8x than 10x. Such variables have a significant influence on how much you are saving for retirement.

Retirement planning may seem overwhelming and exhausting, but it is crucial to take control of your financial future. By following our age-based savings factors and suggested milestones, you can build a retirement savings plan that suits your needs and lifestyle. However, don’t be discouraged if you have crossed the initial age milestones without much savings to show. Even if you're behind on retirement savings, there are many ways to catch up, such as investing for growth through a diversified investment mix or working longer, if possible. The key is to take action; and the earlier, the better.

At Foundation Wealth & Tax Advisors, our mission is to propose wealth management and planning strategies that are tailored to meet our client’s long-term financial goals. As your advisors in retirement planning, we will develop, implement, and monitor a retirement strategy based on your current income and lifestyle expectations post-retirement. For further details, feel free to reach out to us–we are here to help.