Are you on track to retire? Don’t know? You’re not alone… According to Vanguard, 66% of working Americans have never tried to calculate how much they need for retirement.
There are a myriad of online calculators available but most people just can’t figure out how much to save, how to invest their savings and don’t really know if they are on track to retire.
Some of the factors that need to be considered to get this number nailed down include, but are not limited to: desired retirement lifestyle, health status, your spouses health and assets, expected investment returns, desired annual withdrawal amount and a bunch of other factors that requires a lot of guesswork.
Fidelity Investments, the nation’s largest retirement administrator, realized that replacement income at retirement was a difficult concept for participants to understand. So they recently published retirement asset targets for each stage of your working career. The magic number they came up with was participants need 8 times their final year’s income saved in their retirement accounts. The more helpful numbers, however, are the target savings along the way that help you understand if you are on track towards hitting that goal.
Fidelity says employees should have accumulated retirement assets the equivalent of:
- 1x your current annual income in retirement savings by age 35 to reach the first milestone
- 2x by age 40
- 4x by 50
- 5x by 55
- 6x by age 60
If you manage your company’s retirement plan, you have an opportunity to help participants with plan design and participant education to help your team members get there.
Are you on track?