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When You Retire Without Enough

How much have you saved for retirement? Are you on pace to amass a retirement fund of $1 

million by age 65? More than a few retirement counselors urge pre-retirees to strive for that 

goal. If you have $1 million in invested assets when you retire, you can withdraw 4% a year from 

your retirement funds and receive $40,000 in annual income to go along with Social Security 

benefits (in ballpark terms, about $30,000 per year for someone retiring from a long career). If 

your investment portfolio is properly diversified, you may be able to do this for 25-30 years 

without delving into assets elsewhere.1

Perhaps you are 20-25 years away from retiring. Factoring in inflation and medical costs, maybe 

you would prefer $80,000 in annual income plus Social Security at the time you retire. Strictly 

adhering to the 4% rule, you will need to save $2 million in retirement funds to satisfy that 


There are many variables in retirement planning, but there are also two realities that are hard 

to dismiss. One, retiring with $1 million in invested assets may suffice in 2018, but not in the 

2030s or 2040s, given how even moderate inflation whittles away purchasing power over time. 

Two, most Americans are saving too little for retirement: about 5% of their pay, according to 

research from the Federal Reserve Bank of St. Louis. Fifteen percent is a better goal.1

Fifteen percent? Really? Yes. Imagine a 30-year-old earning $40,000 annually who starts saving 

for retirement. She gets 3.8% raises each year until age 67; her investment portfolio earns 6% a 

year during that time frame. At a 5% savings rate, she would have close to $424,000 in her 

retirement account 37 years later; at a 15% savings rate, she would have about $1.3 million by 

age 67. From boosting her savings rate 10%, she ends up with three times as much in 

retirement assets.1

Now, what if you save too little for retirement? That implies some degree of compromise to 

your lifestyle, your dreams, or both. You may have seen your parents, grandparents, or 

neighbors make such compromises.

There is the 75-year-old who takes any job he can, no matter how unsatisfying or awkward, 

because he realizes he is within a few years of outliving his money. There is the small business 

owner entering her sixties with little or no savings (and no exit strategy) who doggedly 

resolves to work until she dies.

Perhaps you have seen the widow in her seventies who moves in with her son and his spouse 

out of financial desperation, exhibiting early signs of dementia and receiving only minimal 

Social Security benefits. Or the healthy and active couple in their sixties who retire years 

before their savings really allow, and who are chagrined to learn that their only solid hope of 

funding their retirement comes down to selling the home they have always loved and moving 

to a cheaper and less cosmopolitan area or a tiny condominium.

When you think of retirement, you probably do not think of “just getting by.” That is no 

one’s retirement dream. Sadly, that risks becoming reality for those who save too little for the 

future. Talk to a financial professional about what you have in mind for retirement: what you 

want your life to look like, what your living expenses could be like. From that conversation, you 

might get a glimpse of just how much you should be saving today for tomorrow.

This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note - investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.



1 - investopedia.com/retirement/retirement-income-planning/ [6/7/18]

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