Are you ready for retirement?
Whether retirement is years away or right around the corner, it's important to know what to expect during retirement, how much money you might need to live comfortably, and how much money you may have when you retire.
How much do you know about retirement?
How much will you need for retirement?
How much will you have for retirement?
How much do you know about retirement?
Three things you can plan for in retirement:
Longevity – People are living longer, healthier, more productive lives. As a result, people today need to be prepared to meet expenses during a retirement that may last for 20 years or more.
Medical care costs – A couple both age 65 today who
live to average life expectancy could need as much as $295,000 to cover
premiums for health insurance coverage and out-of-pocket expenses during
retirement.*
*Source: Employee Benefit Research Institute Issue Brief No. 295, 2006.
Long-term care costs – Long-term medical care costs, including in-home health care or assisted living expenses, have been rising sharply. The MetLife Mature Market Institute’s 2007 survey reported that the national average rate for a private room in a nursing home is $77,745 a year. Even if you have long-term care insurance or receive Medicare benefits, you may still need to cover a significant portion of your long-term care expenses yourself.
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How much will you need for retirement?
While it's impossible to know exactly how much money you'll need for retirement, you can come up with a rough idea by comparing your expenses with your projected income, making adjustments as necessary. Experts suggest that you'll need approximately 70% to 80% of your pre-retirement income during your retirement years.
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How much will you have for retirement?
Preparing for a financially secure retirement is no small feat. As with all serious endeavors, advance planning and flexibility will be your greatest assets. Many retirees underestimate their income potential by not considering all of the sources available to them.
Sources of income
Like most people, you're likely to have multiple sources of income during retirement. Keeping track of where your money is today and where you can expect it to be coming from tomorrow can give you a better sense of what you need to do to prepare for the future. Consider:
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Social Security – For people age 65 and older, Social Security may provide 39% of their income during retirement.* To receive an estimate of your Social Security benefits, contact the Social Security Administration at 1-800-772-1213 or visit www.ssa.gov to estimate.
*Source: Social Security Administration, Office of Research, Evaluation, and Statistics, Income of the Aged Chartbook, 2004 (released September 2006).Find out how much income you may receive from Social Security »
- Company-sponsored retirement plans – Savings accumulated through these plans are likely to make up a significant portion of your income during retirement.
- Other potential sources of income – Pensions, Traditional or Roth IRAs, life insurance, individual annuities, real estate, part-time work, family inheritance or trust, and equity in your home may also help support you during retirement.
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