How Much Money Will You Need to Retire
| If you want this amount of income each year of your retirement... | Your retirement nest egg must be...* |
|---|
| $20,000 |
$233,800 |
$279,400 |
$304,400 |
| $40,000 |
$467,600 |
$558,700 |
$608,800 |
| $60,000 |
$701,400 |
$838,200 |
$913,200 |
| $80,000 |
$935,200 |
$1,117,500 |
$1,217,700 |
| |
...to last 20 years |
...to last 30 years |
...to last 40 years |
*Figures reflect assumption that your nest egg earns 6% a year. After the number of years shown, your account balance is $0.
Think Retirement Is Out of Reach?
Maybe it's time for a new attitude.
There’s no doubt about it: Saving for retirement is hard. There are so many other demands on your paycheck — mortgage payment, car payment, tuition, credit card bills, groceries — the list goes on and on. It’s much easier to focus on paying for the things you want and need today than to think about your needs in the distant future. But putting off saving for retirement — or not saving enough — means you’re shortchanging one of the most important people in your life: you.
Here are a few tips on what you can do about it.
Build a Budget
The first step to getting your savings on track is to know where your money is going. Make a list of all of your monthly expenses, then deduct the total from your monthly income. If you have money left over after taxes, you could be saving more. If there’s nothing left over, review your list and see if there’s anything you can do without.
If you haven’t already, add "Savings Plan" to your list of budget items and write down the amount (or the additional amount) you can invest each month. Putting the amount in writing can help you achieve two important results: First, you’ll start thinking of "saving for retirement" as an important financial obligation. Second, you’ll feel more committed to following through on your savings budget.
Spend Less Than You Earn
It’s human nature — we like to spend what we earn. Whatever goes into the checking account is considered "fair game." If there’s extra money in there at the end of the month, it’s frittered away on impulse buys at the grocery store, the mall, or on eBay.
Sound familiar? If this happens to you, be sure to maximize your contributions to the Savings Plan. Your contributions will be taken out of your paycheck before you’re tempted to spend the money on stuff you don’t need. If you’re worried about accessing your money when you’re in a pinch, consider investing some of your contributions on an after-tax basis. Northrop Grumman offers company matching contributions on after-tax contributions, and you can withdraw your after-tax contributions at any time.
Change Your Mentality
If you’re like most people, saving for tomorrow means you have to give up something you want today — a new car, a new wardrobe, a new flat screen TV. Giving up the things you want is hard to do.
It’s time to turn the tables on this way of thinking. The next time you find yourself admiring something you’ve "just gotta have," ask yourself "What am I giving up in my retirement savings if I buy this?" If you invest $100 a month in an account that earns an average annual return of 6%, you’ll have $16,470 after 10 years and $46,435 after 20 years.
Get Help If You Need It
A financial planner or advisor can help you establish a clear retirement savings goal, help you decide how much to contribute to the Savings Plan and other investments (like an individual retirement account [IRA]), and help you choose an investment mix that’s right for your personal situation. If you are approaching retirement, a professional can also help you decide when and how to start taking distributions from the plan.
Fixed-fee financial planners may charge $500 or more for their services, but many investors think having an expert opinion is worth it. And for all the procrastinators out there, a little "peer pressure" in the form of a financial planner may be just the motivation you need to get your savings in shape.