Some people say you now need $2 million to retire, says reporter Ellen Chang of The Street.
It’s possible to reach that goal by starting early, maxing out your retirement savings each year, and investing well.
While we agree that $2 million in the bank is definitely a laudable goal, take the exact dollar number you need with a grain of salt.
We’ve seen many clients manage perfectly well in retirement with much less.
Rather than focusing on the dollar signs, focus instead on what’s really important about the savings debate:
- You do need to save more than ever because you’ll live longer and the responsibility of saving for retirement is now squarely on your shoulders.
- You absolutely should try to save 10 to 15% of gross income each year.
- The sooner you start, the easier it will be.
- Don’t spend more than you earn, and avoid consumer debt. You can get away with having much less set aside in retirement if you’re careful about how you spend what you do have.
- With today’s low investment returns, each $1 million you save will only generate about $40,000 per year of sustainable and safe income.
- Set savings goals each year. People who have specific savings goals are more likely to reach them.