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Barbara Marquand | guest writer for GoTalkMoney

Take Stock of Your Financial Life During National Save For Retirement Week

If nothing else, the tough economy has shown the importance of making smart money choices and saving for the future. In honor of National Save for Retirement Week, Oct. 18-24, take stock of your finances to gauge whether you're on track for living well when you retire.

Your Savings Rate: Could It Use a Lift?

If you're like most workers, you or your spouse have set aside money for retirement, but your savings rate is a bit meager. Although three-quarters of workers say they've saved some money for retirement, more than half--53%--have less than $25,000 in savings and investments, not counting their home and defined benefit plans, according to the Employee Benefits Research Institute's 2009 Retirement Confidence Survey.

Get Money Smart

First introduced three years ago by the National Association of Government Defined Contribution Administrators Inc., Congress unanimously designated the third week in October National Save For Retirement Week to increase financial literacy and raise awareness of retirement-savings vehicles. Whether you plan to retire in a few years or in a few decades, the time for retirement planning is now. Consider these questions to evaluate your financial position:

Annual Income: How Much Money Will You Need?

Calculating an annual income for retirement gets more important as you age. People in their 20s and 30s can focus simply on saving--experts recommend putting away 15 percent of gross income for retirement. But once you're in your 50s, you'll want a number. Most experts agree you'll need 70% to 90% of your preretirement income to maintain your standard of living. So that means if you make $100,000 a year before taxes now, you'll need at least $70,000 to keep your current lifestyle. (The less you earn the higher percentage you'll need in retirement.)

Your Savings: How Much Should You Have?

Contact the Social Security Administration and request a Personal Earnings and Benefit Estimate Statement to project how much Social Security income you'll get. Add in other sources of income, such as pensions. Now calculate how much of a nest egg you'll need to fill the gap between the income Social Security and pensions provide and how much you'll need to live each year for the rest of your life. A man retiring at 55 can expect to live 24 years, and a woman can expect to live another 28 years.

How Much More Do You Need to Save?

Add up how much you've saved for retirement in 401(k) s, IRAs and annuities. Use conservative estimates to project how much those investments will grow by the time you retire, and compare that figure to the size of the nest egg you'll need to live comfortably. This should give you a good idea of how much more you need to save.

Boost Savings with Best Savings Rates

Plan how to increase your savings rate if you're behind. If necessary, cut expenses, sell assets, or increase your income with a second job. Save as much of your income as you can. Choose investments wisely and get the best returns possible. For instance, research and get the highest interest rates on cash investments, such as money market, savings accounts and CDs. If you still don't think you have enough time, think about delaying retirement or working part time for a while after the time you had planned to quit working. You'll stay connected and purposeful but still have more time for leisure.


U.S. Department of Labor • Savings Fitness • http://www.dol.govhttp://www.dol.gov/ebsa/pdf/savingsfitness.pdf

National Association of Government Defined Contribution Administrators Inc. • National Save for Retirement Inc • http://www.nagdca.orghttp://www.nagdca.org/content.cfm/id/nagdcanote20090812

Employee Benefits Research Institute • Why Are Americans Delaying Retirement? • Oct 01, 2009 • http://www.ebri.orghttp://www.ebri.org/pdf/FFE138.01Oct09.Finl.pdf

U.S. Department of Labor • Top 10 Ways To Prepare For Retirement • http://www.dol.govhttp://www.dol.gov/ebsa/publications/10_ways_to_prepare.html

Mary Beth Franklin, Kiplinger's Personal Finance Magazine • The Basics: How Much Do You Need? • http://moneycentral.msn.comhttp://moneycentral.msn.com/content/Retirementandwills/Createaplan/P142702.asp

Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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