Should You Do An Ira Rollover, 401k, Or Just Save More Money?
Most Americans rely on individual 401k plans for the bulk of their retirement. A serious problem with 401K plans is the investor's reliance on employer matching for the plan. This may cause an employee to rely too much on the employer and not contribute enough to savings. But, if you have not taken a serious look at retirement planning yet, nothing will give you a wake up call like using one of the many retirement calculators available on the internet. Retirement planning, which is essential for every adult, certainly is a difficult task and shouldn't be taken lightly.
Because there are so many variables in preparing a financial plan for retirement, the process can be difficult, at best, even when you are using a professional advisor. Some of these variables are: the age at which you retire, the age at which you start your savings, the amount you save for retirement, how much your retirement savings earn over the years and into retirement, how much debt you have, if any, at the age you plan to retire, and the quality of your health entering retirement and how long you live after retirement.
Perhaps the most difficult thing to plan for is inflation. Inflation is caused by Government printing currency. Because that changes from administration to administration, it's hard to predict what policy will be 20 or 30 years from now. On the internet there are dozens of retirement calculators available, and there is a lot of information and ideas on how to plan for this. Some of them seem more plausible than others. In as far as retirement calculators go, what most of them will show you is that you simply cannot rely on Social Security. Even if you do, you will still need to save a substantial amount of money just to maintain something resembling a pre-retirement standard of living.
The economy will probably recover, and continue to grow. However with inflation at anywhere between three and five percent, you are going to be gaining and losing value in your investments based on how much your savings is being eroded.
$50 a week used to be a "normal" wage. Even during mid-life that level of income had increased to $200 a week. Now, however, you would not even think of trying to live off of $200 a week, let along $50/week.
So, today's wage earners making $500 to $1,000 a week in income can expect similar changes when they reach retirement age. Today's calculations will show wage earners that they should expect to have a retirement nest egg of close to $1 million dollars to retire comfortably in 20 or 30 "Retirement Calculator" years.
One calculator tested online showed that an adult starting with an assets of $100,000 and adding $4,000 year to that nest egg would enter retirement with almost $900,000 but still be bankrupt by 85.
Part of managing your existing income is being able to save money and still having access to it when you need it (sometimes hard to do inside a 401K), and still being able to invest for your retirement (though here, a tax deferral helps). Estimating your retirement income and expenses can be extremely difficult, however, there are many different sources of information and assistance available on the internet to get you started.
Because there are so many variables in preparing a financial plan for retirement, the process can be difficult, at best, even when you are using a professional advisor. Some of these variables are: the age at which you retire, the age at which you start your savings, the amount you save for retirement, how much your retirement savings earn over the years and into retirement, how much debt you have, if any, at the age you plan to retire, and the quality of your health entering retirement and how long you live after retirement.
Perhaps the most difficult thing to plan for is inflation. Inflation is caused by Government printing currency. Because that changes from administration to administration, it's hard to predict what policy will be 20 or 30 years from now. On the internet there are dozens of retirement calculators available, and there is a lot of information and ideas on how to plan for this. Some of them seem more plausible than others. In as far as retirement calculators go, what most of them will show you is that you simply cannot rely on Social Security. Even if you do, you will still need to save a substantial amount of money just to maintain something resembling a pre-retirement standard of living.
The economy will probably recover, and continue to grow. However with inflation at anywhere between three and five percent, you are going to be gaining and losing value in your investments based on how much your savings is being eroded.
$50 a week used to be a "normal" wage. Even during mid-life that level of income had increased to $200 a week. Now, however, you would not even think of trying to live off of $200 a week, let along $50/week.
So, today's wage earners making $500 to $1,000 a week in income can expect similar changes when they reach retirement age. Today's calculations will show wage earners that they should expect to have a retirement nest egg of close to $1 million dollars to retire comfortably in 20 or 30 "Retirement Calculator" years.
One calculator tested online showed that an adult starting with an assets of $100,000 and adding $4,000 year to that nest egg would enter retirement with almost $900,000 but still be bankrupt by 85.
Part of managing your existing income is being able to save money and still having access to it when you need it (sometimes hard to do inside a 401K), and still being able to invest for your retirement (though here, a tax deferral helps). Estimating your retirement income and expenses can be extremely difficult, however, there are many different sources of information and assistance available on the internet to get you started.
About the Author:
Author information: Only so much information can be covered in one article. If you would like more detailed information about any aspect of personal financial planning, please visit David's website.
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11:14 PM
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