New Book - Coming November 2010

New Book - Coming November 2010
Help! My 401(k) Has Fallen - And Must Get Up!

Monday, April 27, 2009

Are You Saving Enough?

Boston College’s Center for Retirement Research recently found that about 64% of Americans aren’t saving enough to maintain their standard of living in retirement. Some ways to tell if you’re at risk:

Find A Percentage -

The general rule of thumb is that retirees need about 70% to 80% of pre-retirement income to maintain their standard of living. To get a better sense though, consider using software that helps take into account factors like paying college tuition or taking fewer vacations. ESPlanner, which costs $150 and is available at , is one place to start.

Map Out Withdrawals -

Many retirees will withdraw 4% of their portfolio in the first year of retirement and adjust that dollar amount each year to account for inflation. Find out if you can live comfortably on that amount plus Social Security payments; if you’ve had heavy portfolio losses, consider skipping the inflation bump initially.

Consider Health Care -

Because lower-income seniors have their long-term care covered by Medicaid, and wealthier seniors can self-fund their care or buy insurance, those in the middle often have the hardest time paying for such services, a big drain on a nest egg. Anthony Webb of Boston College says that non-Medicaid seniors with less than $1 million in assets should plan early for big health costs by cutting expenses elsewhere or delaying retirement.

Figure the Odds -

Financial planners can often do modeling that helps calculate the chances you will still have a nest egg to draw from at a given age. Many retirement experts urge workers to wait to retire until their percentage chance of outliving their nest egg drops to 15% or below. To be safe, it’s good to assume you’ll live to age 90 or 95, especially with longer life spans.

For more information, please contact me at

(Text reprinted from Smart Money Magazine, March 31, Angie C. Marek)

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