Retirement is something that we as working people look forward too, but there is more than just getting to the age that grants you the ability to not work any longer. You must have a savings too keep yourself afloat once you decide to walk away from the work world. But how do you know if you’re on track with your retirement savings?
Most experts believe a general guideline to consider is replacing close to 75% of your retirement income in order to maintain your current lifestyle. Some may spend 30 year and beyond as retired so it is important to have enough income to suffice during this period. Setting a savings goal when you began working can keep you on track with your retirement savings long term.
It is important to benchmark yourself during this process also. You may need to increase your contributions to your retirement savings, and this may create challenging budgetary decisions for yourself and your family. Weight your priorities and decide where you can take extra cash from and put into your retirement. A very commonly used benchmark that can be followed for your own success is someone close to 35 years old, having saved an equivalent of one year of salary put directly into her retirement accounts.
It takes no more than 30 seconds to measure your progress using the T. Rowe Price benchmark chart, which measures the amount of salary you should have saved from age 30-60 that will set you up for a successful retirement. Check out this progress graph to determine if you are on track or could use some guidance and resetting of goals.
If you are not on track with your savings, there are ways to get yourself caught up. Focus more on what you can do to get yourself caught up, and not the fact that you are behind. Check to see if you are eligible for company matches, move your regular savings account around, and add any additional income to your retirement fund, which can include, raises, bonuses and tax refunds.
If you are on track, continue to prioritize your savings. It takes discipline and commitment to be able to save enough money to withstand a lifestyle without working. Always make your retirement savings a financial priority, and continue to do whatever it takes to reach specific milestones during your working tenure. The earlier you start saving, the earlier you will have the funds required to retire.