While $500,000 may be the tipping point for baby boomers to feel confident about their retirement, it's half as much money as I'd need. According to a recent Fox Business article, people between the ages of 50 to 70 with at least $100,000 in savings felt they could make it fine on a half a million dollars in retirement. A retirement study by Maritz Research also showed 60 percent of people who are nearing retirement consider retirement age to be an outdated concept. I think most baby boomers can't afford to retire because they didn't save event close to $500,000. After observing how difficult it is for people to retire on social security alone, I've decided to save up at least $1 million for retirement.
Saving early for retirement
As a member of Generation X, I didn't land a full-time job with an employer-sponsored retirement account in my 20s. Instead, I worked as an "independent contractor." I did open a Roth IRA when I heard about them in my late 20s. According to the retirement study, people who have been saving for at least 25 years hold 60 percent of retirement assets.
Investing on my own
Although two-thirds of the respondents to the study who retired in the past there years worked with a financial advisor, I don't plan to consult an advisor. I prefer to make my own choices about how to invest my retirement savings. Generation X was probably one of the first generations to embrace the "individual investor revolution," by using discount brokerage firms and trading online. I've been trading online now since I was 25.
Relying on different accounts
Like most people in my generation, I won't have a pension when I retire. I feel more confident about my retirement because I have a Roth IRA, regular IRA as well as a 401(k). According to the retirement study, people nearing retirement expect their employer-sponsored retirement plans to provide one-third of their income in retirement. I am counting on my Roth and regular IRA accounts to provide at least half of my income in retirement.
Depending on social security alone
I know several baby boomers who rely either exclusively or primarily on their social security checks. However, the survey showed baby boomers expect social security to provide 20 percent of their income. If most baby boomers think social security will only cover 20 percent of their income, most Gen-Xers must think they won't get any social security benefits. I don't include social security in my calculations when I try to plan for a million dollar retirement.
In order to make it to the million dollar mark, I am attempting to live on 70 percent of my income. I divide 30 percent of my income between a Roth IRA and 401(k) plan. I also actively manage my IRA accounts so that I can take advantage of the bull stock market. Even if I fall short of my million dollar goal, I am confident I'll be able to survive in retirement by owning my home outright.
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More from this contributor:
- Investing Education
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