So you’ve hit or are about to hit the big 6-0? It’s an age where retirement is likely right on the horizon – or at least you hope that it’s right on the horizon. And while you hopefully established a plan decades ago so that you would be able to adequately meet your retirement savings goals and adjusted it accordingly over the years, your 60th birthday should be a nice little wakeup call to reassess those plans and see about when you can realistically retire from your career.
With that in mind, you may be wondering how much you need saved by 60 to retire within the next few years. While there are a variety of factors that play into this, financial experts generally suggest having at least eight times your annual income saved by this 60th birthday milestone.
Doing the Math
So, for instance, if you earn $100,000 per year, having $800,000 tucked away in your retirement savings accounts would be ideal. However, according to TD Ameritrade, it’s estimated that nearly one-third of Americans aren’t on track to meet their retirement savings goals. What’s more is that a large portion of those surveyed aren’t even in the general ballpark. So what can you do to position yourself better for your golden years if you’re not on track to have eight times your salary tucked away by the time you turn 60? Here’s a look at some suggestions.
Pay Off Debt
Like we said in the opening, how much you’ll need in retirement depends on several factors. And if you can eliminate some of the debt that you owe, you can also reduce some of your cost of living in your twilight years. For example, outstanding credit card balances are a good way to start when it comes to reducing your debt. So too is your mortgage. If you can reduce or eliminate any revolving debt or large monthly expenses, then you can invest the money that you would normally have put toward this to max out your annual retirement savings and get back on the right track.
Hopefully, your 60th birthday isn’t the wakeup call you need to invest more into your retirement and you’ve been monitoring any progress (or lack thereof) well before. But generally speaking, financial experts advise allocating anywhere from 15 to 20 percent of your gross income into retirement savings – whether that’s a 401K, IRA or other high-yield savings account. This is especially true if you can double dip on any investment and benefit from any profit sharing or 401K match that your employer offers. Make sure that you’re taking advantage of any and all of the benefits offered by your employer.
Look Into High-Yield Savings Accounts
While retirement savings are great, you also want to have some sort of emergency fund established as well. Look into moving any current savings into a high-yield savings account so that your money works harder for you.
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