How Much Money Should You Save for Retirement?
By Sarah Butrymowicz, USA TODAY
Have questions about planning for retirement? Our Money Mentors have some answers.
They aren’t financial pros. They’re ordinary folks who, as retirees, manage their own finances. Their nest eggs, excluding their homes, vary from a couple hundred thousand dollars to $2 million. The one thing they have in common is experience as retirees — and the desire to share the lessons they’ve learned along the way.
Have a question for them? Send it to firstname.lastname@example.org. (Only general questions, please; the mentors can’t recommend any financial products or provide advice specific to your situation.) Every so often, we’ll choose a question and pose it to our Money Mentors.
For many want-to-be retirees, determining how much money they’ll need is a tough task. There are countless factors to consider and some guesswork involved. How much is enough?
This point is raised by this week’s question. It comes from David Thornhill, 59, mayor pro tem for the city of Lewisville, Texas, who previously worked in the telecommunications industry and describes himself as semiretired.
QUESTION: How much money does it take to retire? I hear you’ll need about 70% to 80% of your current work income to enjoy the same lifestyle in retirement.
Saving in 20s can help you retire early
Family: Married, three children
Job before retirement: Deputy probation officer
How she retired early: Started saving in her 20s, has a pension plan and her husband’s job at Chevron provides the family’s health insurance.
I consider myself fortunate in that I was able to work part time during my children’s early school years.
I had flexible hours that allowed me to drop my children off and pick them up after school. One day per week, I would substitute-teach. After eight years of part-time status, I returned to work full time. This decision was based on the need to plan for retirement. My goal was to retire at age 50 with a pension of at least 70% of my income. That was the minimum age I could retire and still get safety retirement as a law enforcement officer. Even if I didn’t get 70%, I was ready to retire, but fortunately, I reached my goal.
The pension was determined by both my age and how many years of service I put in up to my retirement day, including full and part time. Since I worked eight years part time, I was credited for only four years. These eight years resulted in a 10% difference in my retirement income. However, the recitals, award assemblies, cupcake baking and play dates were well worth it.
Currently, college expenses are our main expense. The only other costs that we have incurred differently are medical. We now pay monthly insurance premiums, but we considered this before I retired. Since I am still young enough to work, I plan to substitute-teach. This will supplement our income and allow me to continue to do something I enjoy.