By the time they hit their 40s, three
out of four people have saved something for retirement.
They're hitting peak earning years, and they should
be well on their way to reaching their long-range
savings goals, too.
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Except life gets in the way. Talk to
planners and they'll tell you that while the typical
40-year-old is keenly aware that he or she should
save, too few have taken the necessary steps to adequately
prepare for retirement.
Many individuals still don't have a
well-defined retirement strategy. Others save, but
not enough. In fact, 35 percent of workers between
the ages of 45 to 54 have less than $25,000 in retirement
savings. And more than six out of 10 have less than
$100,000. At the same time, they are paying for big-ticket
nonretirement expenses, such as college tuition, which
can throw a wrench into growing a considerable nest
egg. It may be the time to switch into overdrive,
but many 40-somethings are instead puttering along
in first gear.
"People save what they can, do their best and figure they'll count their chips later," says Bill Baldwin, president of Pillar Financial Advisers in Waltham, Mass. "But they need to calculate what they need at retirement and how much they'll be able to draw from savings to support their lifestyle."
1. Hit your savings maximums
If you've saved a significant portion of your paycheck over the last 15 to 20 years -- in general, planners say that's at least 10 percent of your salary -- you may only need to tweak your habits. But, if you've neglected retirement, you're probably going to have to push hard to make it to your proverbial finish line.
A 40-year-old who wants $1 million
when she's 67, for example, must save $10,000 annually
and earn 9 percent a year to reach that goal, says
Dee Lee, a Certified Financial Planner and author
of "Women & Money." Impossible? Maybe
not. But more than likely that means cutting back
and making tough choices.
| -- Posted: April 23, 2007 |
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