• People Believe $1.8 Million Is Needed For Retirement, Experts Suggest

    From a425couple@21:1/5 to All on Thu Nov 23 12:07:21 2023
    XPost: alt.economics


    People Believe $1.8 Million Is Needed For Retirement, Experts Suggest
    Otherwise — Unraveling Myths And Smart Savings Strategies That Can Help
    You Save For Your Future
    Jeannine Mancini
    Wed, November 22, 2023 at 11:50 AM PST·5 min read

    In the ever-evolving landscape of retirement aspirations, Americans find themselves adjusting their financial targets for the golden years.

    The new magic number is $1.8 million, up from the previous benchmark of
    $1.7 million, According to the latest 401(k) Participant Study by
    Charles Schwab. But the study reveals a noteworthy paradox — while this ambitious goal is acknowledged, confidence levels among participants are
    not as high.

    Survey respondents said that accumulating $1.8 million in savings is the
    key to a secure retirement. Achieving this milestone by the revised
    retirement age of 67, as dictated by the Social Security Administration, demands significant dedication to work and saving. The silver lining,
    however, lies in the understanding that with early initiation, this
    formidable goal is within reach.

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    Consider this hypothetical scenario: embracing a 401(k) and an
    individual retirement account (IRA), optimizing IRS contribution limits
    and investing in an S&P 500 index fund with a long-term average return
    of 9.82% annually. Beginning from scratch, the monthly savings required
    to amass around $1.8 million by age 67 are as follows:

    Age 25: $242 per month

    Age 35: $646 per month

    Age 45: $1,940 per month

    For those who start saving for retirement later in the game,
    particularly at age 55, there’s a challenging road ahead. Starting
    retirement planning at 55 necessitates a monthly contribution of $6,600
    or an annual commitment of $79,200 to meet the $1.8 million target by
    age 67.

    But IRS contribution limits cap at $37,500 in 2023, prompting people to
    resort to standard taxable accounts, which lack the tax advantages of retirement accounts.

    The crucial message embedded in this financial narrative is the
    undeniable influence of time. Even for people approaching 40, diligent
    savings and hard work can make the $1.8 million retirement dream a
    reality. Yet, as the mid-40s loom, the monthly savings requirement
    escalates to nearly $2,000, a potentially difficult prospect for many.

    But here’s the potential silver lining: A significant discrepancy arises
    when comparing what the survey participants think they need for
    retirement with established financial advice. Survey participants,
    primarily retirement plan contributors, might be overestimating their
    financial needs. The conventional advice of accumulating around 10 times
    your annual salary by age 67 suggests a more feasible target of $710,000
    for the average American household earning $71,000 annually.

    Seeking guidance from a financial adviser can be a key step in your
    retirement savings plan. These professionals can offer personalized
    advice, taking into account your unique financial situation and
    retirement goals. Whether you’re targeting the ambitious $1.8 million or aligning with the expert-recommended $710,000, a financial adviser can
    help you navigate the complexities of retirement planning and investment strategies.

    When exploring ways to save, it’s important to consider a range of
    investment options. One option is investing in startups. This route
    offers the chance to be part of potentially groundbreaking ventures.
    While not without risk, strategic investments in startups could
    potentially yield substantial returns, contributing a valuable boost to
    your retirement nest egg.

    In addition to the previously mentioned strategies for retirement
    savings, several other methods can be effective in enhancing your
    retirement fund:

    Maximize retirement accounts: Using employer-sponsored retirement plans,
    such as 401(k)s and 403(b)s, is crucial. These plans offer features like employer matching and tax-free or tax-deferred contributions and
    investment growth. In 2023, the contribution limit for a 401(k) is
    $22,500, with an additional $7,500 as a catch-up contribution for people
    50 or older​​.

    Review and adjust your budget: Small changes in your daily spending can accumulate significant savings over time. For example, reducing dining
    out, which can cost an average of $3,000 annually, or canceling
    unnecessary subscriptions and memberships can free up substantial
    amounts for retirement savings​​.

    Increase your income: Having a side job or hustle can boost your income
    and, consequently, your ability to save for retirement. This can range
    from part-time jobs to freelancing or renting out a spare room​​.

    Use your home as a financial asset: For homeowners, paying off the
    mortgage as quickly as possible is a strategic move. It provides a
    substantial asset at retirement and frees up more income for investing
    in retirement savings​​.

    Delay retirement: If feasible, continuing to work a few more years
    beyond the traditional retirement age can significantly increase your retirement savings, thanks to extended compound interest accumulation
    and continued income​​.

    Automate your savings: Setting up automatic transfers to your retirement accounts ensures regular contributions and harnesses the power of
    compound interest over time​​.

    Open an individual retirement account (IRA): Opening an IRA, whether a traditional or a Roth IRA, can help build your retirement savings. The
    choice between the two depends on your income, tax situation and whether
    you have access to an employer-sponsored plan​​.

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    This article People Believe $1.8 Million Is Needed For Retirement,
    Experts Suggest Otherwise — Unraveling Myths And Smart Savings
    Strategies That Can Help You Save For Your Future originally appeared on Benzinga.com


    © 2023 Benzinga.com. Benzinga does not provide investment advice. All
    rights reserved.

    9 hours ago
    Rule1 for retirement: Do not live above your means. Also, if navigating
    these complex markets is proving challenging, consider seeking pro
    guidance. Personally, I'm ever thankful for the valuable advice I've
    received. At 52, witnessing my portfolio surpass the $1.5 million
    milestone was beyond my expectations. I aim to retire in the next 6-7
    years. The media is just for the sales; don't rely too heavily on them.

    --- SoupGate-Win32 v1.05
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