{"id":7872,"date":"2014-07-16T15:09:54","date_gmt":"2014-07-16T22:09:54","guid":{"rendered":"http:\/\/www.marketriders.com\/investing\/?p=7872"},"modified":"2016-12-21T07:27:58","modified_gmt":"2016-12-21T15:27:58","slug":"three-easy-retirement-rules-thumb","status":"publish","type":"post","link":"https:\/\/www.marketriders.com\/investing\/three-easy-retirement-rules-thumb\/","title":{"rendered":"Three Easy Retirement Rules of Thumb"},"content":{"rendered":"

Everyone loves a simple way to measure progress. We use letters for grades and annual salary as way to gauge our performance relative to others.<\/p>\n

It’s not the same as your “value” as a person, and it’s certainly unhealthy to use our achievements to keep score socially. Yet when it comes to finances, knowing where you stand is hugely important.<\/p>\n

While you have enough to retire? Can you quit work feeling secure that your money will last?<\/p>\n

\"retirement<\/a><\/p>\n

Financial advisors will sit down with you and, for a fee, come up with\u00a0very precise figures to answer those questions<\/a>. Their services can be invaluable.<\/p>\n

But you can get a good idea of how things are going by using\u00a0retirement\u00a0rules of thumb that anybody can figure out in just a few minutes.<\/p>\n

1. Multiply your final salary<\/strong><\/p>\n

Fidelity Investments\u00a0every year issues\u00a0retirement\u00a0savings guidelines in the form of a simple mathematical equation. Printed as a table, Fidelity suggests savers have 1 times their salary at age 35, then 2 times at 40, 3 times at 45, and so on in increments up to age 60.<\/p>\n

At 60, you should have 6 times your salary at that age set side, then finally 8 times by age 67. \u00a0In dollar terms, a 45-year-old making $100,000 a year should have $300,000 in\u00a0retirement\u00a0savings at 45, yet a 67-year-old making $75,000 at\u00a0retirement\u00a0age needs $600,000 in hand by age 67.<\/p>\n

The calculation provides very different numbers for people with different salary levels, but it presumes that your cost of living in\u00a0retirement\u00a0will be in line with whatever your really made while working, so that’s okay.<\/p>\n

2. Subtract $1 million from Social\u00a0Security<\/strong><\/p>\n

A couple who has earned a reasonable combined salary and qualified for the\u00a0maximum Social\u00a0Security\u00a0benefit<\/a>\u00a0is likely to earn something on the order of $40,000 a year in\u00a0retirement\u00a0benefits, if they put off taking those benefits to the full\u00a0retirement\u00a0age.<\/p>\n

Need more than $40,000 to live? Consider that $1 million conservatively invested will generate $40,000 as well. So, for each $1 million you control in\u00a0retirement, you double your Social\u00a0Security\u00a0income. If you only need $60,000 to live, well, you need just $500,000 to retire.<\/p>\n

3. Make sure your investments perform<\/strong><\/p>\n

A well-invested portfolio is likely to\u00a0double in value every 10 years \u00a0or so<\/a>. So what does that mean for your\u00a0retirement?\u00a0If your plan is to get to $1 million, then you have to have $500,000 about a decade before your\u00a0retirement\u00a0target.<\/p>\n

That means having $250,000 about two decades before your target\u00a0retirement\u00a0age, and so on. A 7.2% annualized return will do that, if you can sustain it year in and year out.<\/p>\n","protected":false},"excerpt":{"rendered":"

Everyone loves a simple way to measure progress. We use letters for grades and annual salary as way to gauge our performance relative to others. 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