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Age based Retirement Savings

Age based Retirement Savings


The Average Retirement Savings

At 20 yrs of age - you say "Too Soon!"; at 30 yrs of age - you say "Should I?"; at 40 yrs of age - you say "I should!" and at 50 yrs - you say "Too late!". That's the journey an average man goes through while thinking about investing for retirement.

Are you behind on saving for retirement? Even if you don’t know what counts as "behind," you're likely to need to step up your efforts to build your nest egg. A June 2015 Government Accountability Office analysis found that an average american between the age of 55 and 64 have saved about $104,000 in retirement savings. Sound like a lot? Not when you realize that sum would translate into only a $310 monthly payment if you buy a lifetime annuity.

Whichever age bracket you belong to, let this serve as a wake up call to take your first step towards investing for retirement. You don't want to work till the last day of your life and you neither want to stop working without enough money to live in your retirement. Catalyst aims to help you in figuring out where should you be at different stages of life and how to get there.

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Start Investing - Twenty's

You’re early in your career and your paycheck may be evidence of that fact. You may also have a student loan and a lot of unfulfilled wishes from childhood to buy things from your own salary that parents didn't buy for you. Investing is no-where in the priority list. You're thinking it's too early to think about investing/ wealth creation and financial goals. Warren Buffett started investing at the age of 11 and he says he was late by 11 years. Now calculate how much have you lost by not starting early.

The reason not to be alarmed: You probably have more than 40 years before you retire. That’s a lot of time to make up the shortfall.

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Key Age Based Investing

Start Investing - Thirty's

It’s nice to be 30. Either you’ve grown with the same company or you’ve gained enough experience through trying a few companies to get out of those entry-level pay grades. But life is more complicated now. You might be married, have a few kids, and maybe bought a home. The stats seem to show it too. The average thirty something has about a half of annual income saved. Depending on your annual salary, that might be okay but it's high time you should start thinking about creating a second source of income. Everything from cricket matches to that unexpected car repair will easily take a bite out of your paycheck and you would be thinking "Who has the money to save for retirement?". Move out of this space as soon as possible.

According to Catalyst Investing, the investment management firm, you should have about the equivalent of your annual salary saved as a nest egg by age 30 and balance should be invested appropriately.

Savings for Retirement

Start Investing - Forty's

You’re in the prime of your career. You’ve paid your all your dues and hopefully by now you have a salary that you can be proud of. There might be a home loan EMI continuing and rest all should be under control. But the kids are older, the house is bigger, you might have to fork over money for a car or education for one of the kids, and if you’re honest, you might be blowing money in places that you could do without. You would be facing some issues with the high college and overseas education fee and thinking about how to manage these as they would be approaching fast. Your friends would be advising you to invest and you're seeing the markets for last ten years and they have been increasing with some ups and downs. You're thinking "I should" also invest and create wealth as my other friends are doing.

Statistically, even most Americans are dangerously behind at this point, with an estimated median savings of an year's income – a sum that falls well short of conservative benchmarks of a nest egg at age 40 being three times their annual salaries.

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Start Investing - Fifty's

You don’t feel old, and you’re not, but you’re only about 5-10 years away from the classic age at which you need your retirement money to live on. However, real life goes on. You might be paying kids’ college tuition, helping with car payments, gas, and numerous other expenses. The house is getting older and needs more fixing up, and maybe medical bills are rising. The estimated median savings of the average fifty something is about two times of annual salary – far shy of the desirable four -to- five times your annual salary. If you made $60,000, you should have $240,000 saved – at least.

Consider meeting with a financial planner, especially one who specializes in retirement to get things in order and carve out a strategy for your portfolio.

Start Investing - Sixty's

Now is when you begin to reap the rewards of decades of saving. At some point, you’ll be using this money to support your lifestyle. By the time you reach 60, you should have six times your salary saved – that’s $360,000 if you make $60,000 per year. Unfortunately, the average sixty something has an estimated median of half of desired amount in the bank. Not nearly enough. At this point it’s hard to save enough to make up for the shortfall. Instead, look at your assets. What can be monetized at some point to help sustain you?

And don’t forget to meet a financial planner to discuss your financial requirements. You may opt-in for a pension plan by paying a lump-sum.Most seniors find this to be a simple way of ensuring regular source of monthly income.