When to Retire Comfortably
March 23, 2023
It's good to know when to retire comfortably; having those savings means peace of mind. When you first enter the workforce, retirement seems like a lifetime away. Unfortunately, saving for retirement does not generally feel like a priority at that point in life, but that is precisely when the savings should begin. The most common goal that Americans have for retirement is to amass a nest egg of $1 million. However, if you have yet to prioritize retirement planning or savings and $1 million seems out of reach, don't panic.
Knowing The Right Time and When to Retire
Your ability to retire comfortably depends on several important factors.
When Is the Right Time to Retire?
The median retirement age for men in the U.S. is 64.6 years, and the average retirement age for women is 62.3. Social Security benefits may be drawn in full between 66 and 67 years of age, depending on your birth year. For these reasons, the late 60s seem to be the sweet spot for retirement, where you have had time to amass a decent pot of savings and can begin to take advantage of Medicare and Social Security to supplement your nest egg.
How Much Money Will You Need?
As you begin to create your retirement plan, it is important to understand that the amount in the nest egg is not essential. It's whether you have sufficient funds to generate the annual income you require to maintain the quality of living you desire in retirement. For the following reasons, you may not need as much as you think:
- You will likely save on gas or other commuting expenses
- You may have finished paying off significant expenses, such as student loans and your mortgage
- You might no longer require life insurance if your dependents have become self-sufficient
Making Retirement Comfortable
How can you know how much money you'll need for a comfortable life after retirement? Careful planning and saving is critical to make your dreams for the later part of your life a reality. During your working life, you should strive to meet the following financial milestones to make it possible to retire younger and have sufficient funds to enjoy many years after your working years have ended.
- One year's salary saved in a retirement account by age 30
- Three times your salary in savings by age 40
- Five to six times your salary by age 50
- Seven to eight times your salary by age 60
What Are Other Considerations?
These guidelines are not strict requirements for retirement, and other factors are also at play. Depending on your employer's retirement plan, you may have a pension, annuity, or another financial package that provides an annual income that will enable you to prosper in retirement without as much in savings. A retirement income planning calculator can help to determine how different choices will impact the amount you can expect to have available at the age you would like to retire. Contributing varying amounts of monthly savings, front-loading your savings, or working longer to continue saving are different strategies to improve your financial position for retirement.
About 1891 Financial Life
At 1891 Financial Life we don’t just sell policies, we offer possibilities. We pride ourselves on giving back to the communities that we serve by providing quality and comprehensive insurance solutions. We are a not-for-profit life insurance Society, which means the sales from these financial service products help fund member benefits along with social, educational, and volunteer programs designed to respond to community needs.
Our portfolio is extensive, ranging from various life insurance policies to our annuities to support your financial needs no matter what stage of life you’re in.