Will You Outlive Your Savings?
As life expectancies increase, so does the possibility of outliving the money you’ve saved. According to the U.S. Department of Labor, experts estimate you’ll need about 70 percent of your retirement income – lower earners, 90 percent or more – to maintain your current standard of living if you stop working. Here are some sobering facts:
*Only 42 percent of Americans have determined what they’ll need to save for retirement.
*One quarter of those who had 401(k) coverage in 2005 did not participate.
*The average American spends 18 years in retirement.
*Many financial professionals state that individuals will need 60 percent to 80 percent of their pre-retirement income each year that they are in retirement.
Consider: what will you do for close to two decades if you run out of money? Rather than face that question, it’s important to make retirement savings a high priority.
If you are 40 years old right now, and make a monthly contribution of just $525 per month, your portfolio would be worth $500,000 by the time you retire at age 65. If you are 30, you can get the same results for under $220.
What are you waiting for? It’s time to get started…
*This example assumes an optimistic 8% annual return on an account that’s tax deferred. The example provides no consideration for taxes due upon distribution. The example only indicates that consistent contributions can be one of many methods of planning for retirement. Investments in mutual funds or other securities which have no guarantee could provide disappointing results and not meet your objectives.
Systematic Accumulation
A Systematic Accumulation Plan is a methodical procedure to invest at regular intervals in a particular issue or fund. Such a plan provides for the accumulation of the issue or fund during both periods of rising and declining prices. When used appropriately and consistently, the systematic accumulation of investments can benefit planning for retirement by reducing the average cost of the issue or fund.
Compounded Interest Calculator
Take a look at the Compounded Interest Calculator that is used to show simple results for a specific sum invested monthly using a user - specified hypothetical rate of return compounded until age 65.
Users should understand that with higher risk, comes higher volatility; that illustrations of specific rates of return for extended time periods may create unreasonable expectations. Hence the compounding calculator can be misleading - as it is unlikely that rates of return or inflation will remain static for any lengthy period.
In addition, this simple calculator provides only positive rates of return from one to twenty five percent. The range of its function will provide an exaggerated rate of return over any period of negative results and over periods in which any period's result is below the user - specified hypothetical rate of return.