Here’s the Real Cost Breakdown to Secure Your Lifelong Retirement

With inflation and the cost of living skyrocketing, saving for retirement is no easy feat. If you’re struggling to figure out how to make the most out of your retirement savings, you’re not alone. Here’s what you need to retire comfortably—and how you can achieve it.

The Need for Multiple Income Streams

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In an era where expenses only seem to increase, having multiple income sources has become the norm for families, entrepreneurs, and students. This reality underlines the importance of a robust retirement plan. Surprisingly, only 36% of U.S. workers feel confident about their retirement savings being on track.

Here’s a wake-up call: the average retirement savings of $120,000 for those aged 55 to 64 won’t cut it. This sum would barely yield $1,000 monthly over 15 years of retirement, far from enough considering longer life spans and soaring healthcare costs.

What Does Retirement Really Cost?

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Based on census data and a median household income perspective, achieving $750,000 in a Roth IRA and a monthly Social Security check of $1,800 is workable. As of September 2023, the average Social Security retirement benefit stands at $1,706.98, with the maximum amount depending on when you start claiming.

Gone are the days of relying solely on government security for retirement. Currently, workers aged 25 to 34 save at an average rate of 10.5%, and those under 25 save at 8%. These figures suggest a need for increased savings to meet retirement goals.

From the Basement Into the Garage

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Social Security’s trust fund is expected to be depleted by 2033, leaving retirees with only 77 cents for every $1 in benefits. Dave Goodell, Executive Director at the Natixis Center for Investor Insight, has highlighted this issue, which makes retirement less promising.

Investing for income generation is critical, but it comes with risks. The larger your portfolio, the more you’re exposed to market volatility. Continuous investment, which is often overlooked, is crucial. 

Strategic Financial Planning in Retirement

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Exploring a 4% annual withdrawal from a cash portfolio could yield $30,000 yearly for 25 years, plus Social Security, as Steve Davis of Total Wealth Academy noted. However, this approach may require compromises on retirement luxuries like travel and leisure.

Bryan Cannon, author of Retirement Unplanned, emphasizes the importance of tailoring retirement plans to individual lifestyles and expenses. He recommends careful budgeting, focusing on healthcare, emergency funds, and debt reduction, to enhance growth flexibility and mitigate inflation’s impact.

Making It Work

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Can you make it work with $750,000 in a Roth IRA and $1,800 monthly from Social Security? Absolutely, but it requires smart management and a personalized financial plan. Your retirement lifestyle hinges on how well you handle this balance. With the right strategy and savings approach, a fulfilling retirement isn’t just a dream — it’s a realistic goal.

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Author: Luana Cantuarias

Title: Contributing Writer

Expertise: Blockchain, B2B, and SaaS

Bio:

Luana Cantuarias is a seasoned finance writer with over a decade of experience in the realms of Blockchain, B2B, and SaaS.