Why You May Want to Save More for Retirement Than You Think
Earlier this year, a piece of financial information came out that shook a lot of well-intentioned people to their core. Rather than the classic $1 million that most people assumed they had to save for retirement to be comfortable, financial experts suggested that the right number may be closer to $1.5 million.
Rebecca Walser, a tax lawyer and certified financial planner, suggested that people should go as far to set aside 25 percent of pre-tax income over the 10 percent many people do. How did things change so drastically? As it turns out, there are a number of reasons.
We Are Living Longer
The first reason you may want to ramp up your retirement savings isn’t necessarily a bad thing, depending on how you look at it. . . . people are living longer. This is a good thing in that you have more time to enjoy your retirement years, but you also need to plan further ahead to keep those years enjoyable. Many conventional methods of savings don’t account for this, even some of the best benefit options like a military pension. Not to mention, we see the cost of living going up, meaning that if retirement is a far-off thing for you, your money may count for less when you get there.
Traditional Retirement Benefits Are Not Enough
Another reason why you may want to save as much as reasonably possible is that a lot of the conventional entitlements may not be enough. In the beginning, Social Security was always meant to be a supplement for a pension rather than the sole means of financial support when one is done working. Now, pensions are a relative rarity, and the funding for Social Security is in doubt. The SSA themselves have said that you need to plan for more than just those benefits—all the more reason for you to be proactive about retirement.
How Much Will You Need?
In addition, some groups may have a built-in incentive to try and overshoot when it comes to their retirement savings. For example, women earn only about 80 cents for every dollar earned by men on average. This means that they may want to save even larger percentages of what they earn in order to have a comfortable nest egg for retirement. Not to mention, women also tend to earn less from social security and live longer, giving them added financial pressure.
The good news is that as a federal employee, you have access to a suite of potential benefits many other people would love to have. The bad news is that as the cost of living increases, you may want to have even more for added security. This applies doubly if you have health issues or have certain goals you want to accomplish during your retirement years. Secure Choice is here to open up your options. Our Thrift Savings Plan Alternative has the safety of the G fund, with added flexibility and no management fees. In the event of your death, you can also choose your beneficiary.
