The problem is that most people seem to SAVE (or not save) for their retirement without having a clear understanding of what they want out of retirement, therefore, how much income they need to fund that lifestyle.
It MAY have NOTHING to do with what they currently earn … yet, replacing some or all of the pre-retirement salary is what everybody seems to be aiming for.
So, the issue changes – in my estimation, for MOST people – if they are set to save for a $35k a year retirement, but their dream of living in Tuscany [insert retirement dream of choice: working with the poor in Africa; sailing around the world; quitting my job well BEFORE usual retirement age to become a painter; etc.] requires $150k a year!
Are you really on track for your retirement?
What caught my attention was the opening sentence to their post:
“I feel very knowledgeble about long term investments. I feel I manage my retriement savings very well and this has been a top priority.”
If you think your ‘retirement is on track’ just because you are saving your 10% or so into all the ‘right investment vehicles, or retirement for you is still a hell of a long way off, I would just ask that you do the following quick ‘reality check’:
1. What is your current Net Worth (try the CNNMoney calculator)?
2. What is your annual income goal to fund the retirement that you always hoped for?
Multiply that by 20 to 40; depending on how certain you want to be that your money will last as long as you do …
3. The difference between 1. and 2. is what you have to make up (ADD a little more for inflation) between now and retirement.
If it’s only a little, keep doing what you’re doing; your retirment is probably ‘on track’ …
BUT, if it’s a lot, maybe you need to think about INVESTING actively (business, real-estate, trading) rather just SAVING (CD’s, 401K’s, etc.).”