How New Recommendations Can Wreck Your Retirement Savings
Fidelity recently released new rules and recommendations for retirement. Although some of the recommendations are really helpful as a barometer for retirement, there are quite a few assumptions Fidelity makes on your behalf- and you know what assuming does.
It is important to remember that these recommendations are generalizations created for a large mass of people, and that to get a real idea of how much you should save, you need to make a financial plan unique to you, your needs and your plans. Why is it so important to remember that these recommendations are generalizations? Because these recommendations are based on a few assumptions that may not apply to you- and if you don’t take a moment to think about whether they do or not, these assumptions could wreck your retirement savings.
Here is a list of the assumptions Fidelity- and other sources- use in their retirement rules and recommendations that you should know about when determining if they apply to you:
- You’ll retire at 67 and take Social Security
- You started increasing your contributions by 6% or more at age 25, increasing steadily until your early 30s, at which time your annual contribution was and continues to be 12% or more of your pay
- Your investments earn 8% annually
So, now that you know this, how does this change the picture for you? Are you REALLY on track? How do you need to revise your plan to your own individual circumstances?
- When you retire, you may not be entitled to Social Security, considering it is projected to become insolvent sometime between 2033 and 2050
- You may still retire at age 67, but also make allowances for retiring earlier in the case of illness or another as yet unforeseen circumstance
- You may only be putting between 3 and 5 percent of your annual pay toward retirement, as the average American puts away even less- and keep in mind that employer matching is rare
- Life expectancy is now 92 years
- A rate of return of 5% is considered good nowadays
How does this change your plan?
We can help if you’re starting to feel lost or concerned. Give us a call at 1-855-60-iPlan for more information, or visit www.iplangroup.com