[ad_1]
Some financial mistakes are worse than others. If you forget this coupon when you go to the grocery store, for example, you risk losing $ 0.75, while other mistakes can cost you several thousand dollars.
A classic mistake made by millions of people does not start saving enough for retirement. It's such a huge mistake that it could cost you $ 301,479 or even more. Here is a preview of what it could cost you.
Source of the image: Getty Images.
Millions have not spared enough
First of all, rest assured – regardless of the background of your savings, there is a good chance that many others are even worse off. Here is how those who are nearing retirement have succeeded:
|
Amount saved for retirement |
Workers aged 55 and over |
|---|---|
|
Less than $ 1,000 |
19% |
|
$ 1,000 to $ 9,999 |
6% |
|
$ 10,000 to $ 24,999 |
3% |
|
$ 25,000 to $ 49,999 |
7% |
|
$ 50,000 to $ 99,999 |
8% |
|
$ 100,000 to $ 249,999 |
19% |
|
$ 250,000 or more |
38% |
Source: 2018 Survey on Confidence in Retirement.
The chart is however a bit misleading, as even $ 250,000 will not serve very well most of us in retirement. Consider that the erroneous (but still useful) rule of 4% suggests taking 4% off your nest egg during your first year of retirement and adjusting withdrawals to inflation afterwards. If you withdraw 4% of a $ 250,000 nest egg, you only get $ 10,000 or $ 833 a month.
What you can win – or lose
Now that the scene is ready, here's a preview of what you can save – or lose – on your retirement account. See the table below:
|
Increasing to 8% for |
$ 10,000 invested annually |
$ 15,000 invested annually |
$ 20,000 invested annually |
|---|---|---|---|
|
5 years |
$ 63,359 |
$ 95,039 |
$ 126,718 |
|
10 years |
$ 156,455 |
$ 234,683 |
$ 312,910 |
|
15 years |
$ 293,243 |
$ 439,865 |
$ 586,486 |
|
20 years |
$ 494,229 |
$ 741,344 |
$ 988,458 |
|
25 years |
$ 789,544 |
$ 1,184,316 |
$ 1,579,088 |
|
30 years |
$ 1,223,459 |
$ 1,835,189 |
$ 2,446,918 |
Calculations by author.
Imagine that you (maybe working with your spouse) can earn $ 15,000 a year. If you have about 15 years of retirement, you could end up with about $ 439,865 in 15 years. It's fine, right? Applying the 4% rule would bring you about $ 17,600 in your first year of retirement, or about $ 1,466 a month.
And yet, if you had started saving money sooner? If you could have invested $ 15,000 for 20 years instead of $ 15, you could have raised $ 741,344 or $ 301,479 more!
Of course, the numbers for you Based on your current age, when you hope to retire, what you have already saved and what you can save. Whatever your situation, you can probably improve it.
You could, for example, save more aggressively or transfer long-term savings into a low-cost, broad-based index fund instead of just low-interest deposit certificates. Such movements can help you accumulate more before retirement. (Also do not forget that you can and should continue to invest in retirement because your money will still have a long period of growth – pensions often last for decades, after all.)
Retreats are ideally a time where you can relax and do things that you have always wanted to do. Take action now and you can better prepare for your retirement and ensure financial security.
[ad_2]
Source link