At what age do you plan to retire?
Although there are outliers—people who retire at 45 and people who retire at 80—the average American intends to retire at 65. However, the breakdown by age group varies. The average Baby Boomer1 plans to retire at age 72, while the people furthest from their golden years—Gen Z2 —expect to retire at age 60. 3
As you think about your retirement date, you’ll need to consider a number of issues, including your health, your savings and investments, your family, and what you want to do in retirement.
What are your current expenses?
You can’t know how much you need to retire if you don’t know how much you are currently spending every month—and what you’re spending it on. It’s important to figure out your budget. What are necessities? What can you live without? Excite’s Budget Calculator can be a helpful tool as you work on answering this question.
What will your retirement expenses be?
Some financial experts say that you’ll need 70-80 percent of your pre-retirement income during your retirement years. However, the amount will depend on a wide variety of considerations:
- Where do you plan to live? Will you be downsizing?
- Will you have any debts? Will your home be paid off?
- What health care expenses will you have? Medicare coverage won’t pay for every medical expense, and some people must pay premiums.
- What kind of lifestyle will you lead? Do you want to travel? Will you work part time?
Take into account your retirement dreams, as well as practical realities, as you decide how much money you will need.
How long will you live?
Numerous factors—including genes, lifestyle, and luck—play into length of life. Americans are living longer. Over the next 30 years, the number of one-hundred-year-old Americans is expected to quadruple!4 Be realistic with your expectations, but also plan for a long retirement.
How much will you get from Social Security?
When you reach your full retirement age (66 or 67 depending on when you were born), you can receive your full Social Security benefits. Although you can start receiving benefits at age 62, you won’t receive the full amount. On the other hand, if you delay until you are 70, you’ll receive an increased amount.5 Check out the Social Security Quick Calculator, which will give you an estimate of your benefits based on your date of birth and your earnings history.
How much will you receive from your retirement plan/account?
Although some people have an employer-provided defined benefit plan, also called a pension plan, it’s increasingly less common than it used to be. Instead, many employers offer a defined contribution plan, such as 401(k) plan, which allows you to contribute a portion of your salary to your retirement. Many employers match their employees’ contributions up to a certain limit. Make sure you thoroughly understand your defined contribution plan, so you can benefit from all the available matching funds.
You can also open your own Individual Retirement Account (IRA)—one of the best retirement savings tools available! Do your homework to discover if a Traditional IRA, a Roth IRA, or both will be best for you. Visit our website to learn about your IRA options, and go to Excite’s IRA Service Center to discover how easy it is to open one.
What about inflation, taxes, interest rates, and more?
Obviously, preparing for retirement is a complicated subject. Consult a financial professional to work out the details of your retirement plans.
Is it too late to start saving?
No! Although it’s best to start saving and investing for retirement when you are just starting out in the workforce, it’s never too late. Consult a financial professional who can advise you of your options.
As you consider the answers to these questions, check out Excite’s Retirement Calculator. Based on the data you input—such as annual pre-tax income, current savings, retirement goal, etc.—the calculator can help you decide how much money you should be saving each month. Let Excite help you prepare for retirement!
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[1] Baby Boomers – born 1946-1964.
[2] Generation Z – born 1997-2013.
[3] “Planning & Progress Study 2024,” Northwestern Mutual, https://news.northwesternmutual.com/planning-and-progress-study-2024#:~:text=The%20hope%20among%20Gen%20Z,until%2064%20and%2067%2C%20respectively.
[4] Katherine Schaeffer, “U.S. centenarian population is projected to quadruple over the next 30 years,” January 9, 2024, Pew Research Center, https://www.pewresearch.org/short-reads/2024/01/09/us-centenarian-population-is-projected-to-quadruple-over-the-next-30-years/#:~:text=Centenarians%20around%20the%20world,than%20the%20Census%20Bureau's%20estimate.
[5] “Starting Your Retirement Benefits Early,” Social Security, https://www.ssa.gov/benefits/retirement/planner/agereduction.html.
