This week, I’m talking about how to get back on track for retirement. This is a timely topic right now as the Coronavirus is upending daily life and could change your plans for retirement, especially if you planned to retire in the next couple years. 

On Tuesday, I outlined the 4 primary factors that determine your success in retirement: 

• Asset allocation
• Savings Rate
• Retirement Date
• Spending in Retirement

Today I’m focusing on the 2nd factor: your savings rate. The younger you are and the further you are from retirement, the more important this factor is. If you’re really close to retirement, say within 5 years, increasing your savings actually won’t be as effective as delaying your retirement date or reducing your spending in retirement, but it’s still important. 

So let’s look at savings rate and how it impacts your retirement. Recently, Fidelity determined that in order to be on track with your savings for retirement, you need to have 5x your income saved by age 55, 8x your income saved by age 60, and 10x your income saved by age 67, assuming you plan to retire at that age. Using this rule of thumb calculation is helpful in the years leading up to retirement, because it’s a quick way to assess whether or not you’re on track or behind. 

If you’re behind, the next step is to figure out how much you need to increase your savings to catch up. This step is a bit more complicated and it also needs to factor in how much you can afford to save, since what you should save and what you can afford to save are often 2 different amounts. 

If you want to find out how to close the gap on your retirement savings and figure out how much you need to save for retirement, send me an email and I will send you a simple 2 page worksheet that you can use to calculate how much you should be saving for retirement so you don’t run out of money in retirement. You can email me at [email protected]. That’s [email protected]. 

That’s it for today. Thanks for listening. My name is Ashley Micciche and this is the One Minute Retirement Tip. 

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