Are You On Track For Retirement – A Quick Checkpoint

How much do you need to retire? The answer varies by individual circumstance but simple rules can be helpful as a starting place.  

JPMorgan provides a rough estimate based on your age and income level.  

For example, a household with an income of $200,000 that is 50 years old should have 7.1x their income or roughly $1,400,000 saved for retirement. The same household with an income of $100,000, should have roughly $700,000 saved.  

These are certainly ballpark figures because it varies greatly by family. This analysis makes the following assumptions, among others -  

1) A 60% stock, 40% bond allocation before retirement, and 40% bond, 60% stock allocation after retirement. If you are more aggressive or more conservative, you could need to save more or less. 

2) 5-10% gross savings rate depending on income. If you are saving more or less than that, you might need to have more or less saved already. 

3) Your only income is from Social Security and investments. If you have a pension or other retirement income like a rental property, the amount needed would be less.  

4) A replacement rate of 72%-98% based on income. For example, if your household income is $200,000, they assume a roughly 75% replacement rate – or $150,000 in annual income in retirement. If you plan to cut back more or spend more in retirement, you may need to save more or less.  

While the analysis is not perfect, it provides a baseline for your retirement savings. I clearly have a bias here, but a personal retirement plan based on your individual circumstances is what will give you a better picture of your savings target, and the specific changes that should be made to get on track.  

Happy Planning,

 Alex 

This blog post is not advice. Please read disclaimers.