Print

Finance >> Browse Articles >> Retirement

Rate

How Much Money Should You Save for Retirement?

How Much Money Should You Save for Retirement?

By Sarah Butrymowicz, USA TODAY

Try to retire debt-free; prepare for inflation

Melton McNeill
Duluth, Ga.
Family: Married, three children, although one died a year and a half ago
Age: 82
Job before retirement: United Methodist minister

Of course, it depends on the lifestyle you choose when you retire. I retired in 1992 totally free of debt, and my immediate out-of-pocket expenses (work commute, auto, meals away from home, clothes, etc.) went down drastically. At that time, we were only spending about 40% of preretirement income. However, in the last seven years, the expenditures have increased to 80% of my income.

Most of the increase has been caused by inflation. Trust me: Inflation is a real enemy of your plans to retire without worry. For instance, medical insurance costs have risen precipitously

For the first 10 years, my insurance was fully paid by my former employer; now, because of inflation, I have to cover a portion of the fee. That was unseen. My home insurance has almost tripled in the last 10 years (having filed no claims), and the home value increased by only 50%.

The best preparation you can make for retirement is to put all the law allows into a Roth IRA. When you do retire, roll it over into a self-directed account (if you are market-savvy). That income will be tax-free to you, whereas my regular IRA distribution is fully taxable, and that is costly.

And the second-best preparation is to retire with no debt. That one thing gives you real peace of mind. It also prevents what is perhaps the worst drain on your costs: interest you pay.


Recent Activity

Photo_user_blank_big
bparracksatx received the quiz result of "Future Smokejumper", about 10 hours ago.
Photo_user_blank_big
katlynn95 joined the group "NFL Fans", 2 days ago.
Photo_user_blank_big
Radair received the quiz result of "51-75% correct", 2 days ago.
Photo_user_blank_big
PackersRock1921 received the quiz result of "51-75% correct", 5 days ago.
Photo_user_blank_big
brussel received the quiz result of "51-75% correct", 6 days ago.