How much do you need to save for retirement? Is there a specific number or percentage of your working income you should be replacing?
According to some experts, it might be less than you think.
A study from the Employee Benefit Research Institute found that people retiring with modest assets (less than US$200,000, not including the value of their home) still had 75% of their cash assets 18 years into retirement. That percentage rose to 88% when the retirement savings were US$500,000.
It’s true that outliving your savings is a real possibility for retirees. But experts suggest that having more than three-quarters of your cash savings left after 18 years of retirement is spending too cautiously; having 60% left is a more reasonable target.
In other words, not only is it important to have a plan to save for retirement, but it’s also important to have a plan for drawing down those assets in a reasonable and efficient way. Here are some suggestions on how to do that.
Think about your retirement lifestyle – Carefully consider what your lifestyle will look like. Will you travel a lot or stay close to home? Will you downsize your home? What hobbies or activities will you enjoy in retirement, and what are the associated costs?
Your lifestyle will also change over the years. You’ll likely be more active (and spending more) in your 60s and 70s, and then spending more on healthcare or home care in your later years.
Ask for advice – Working with an advisor can be helpful when crafting a plan for retirement and managing your income during your post-working years. Members of the Canadian Baptist Pension Plan (CBPP) have a unique opportunity to work with a retirement consultant to chart the best course.
With the Canadian Baptist Retirement Income Fund, you have access to a unique fund for providing an income stream in retirement. You also have access to a retirement consultant to help you make a plan so that you don’t over or under spend your assets. After all, wouldn’t we all like to have the peace of mind of knowing we are stewarding our funds wisely?
Keep on course – In addition to pre-retirement support, you can work with the consultant during your retirement to help you stay on track. This is key because experts recommend that retirees adjust their budgets in retirement, depending on how their investments and lifestyle choices change.
Take advantage of the in-plan options available – By keeping your money in the CBPP or joining the Canadian Baptist Retirement Income Fund, you’ll continue to benefit from low management and investment fees that you’re currently enjoying as an active member. It’s a more efficient way to maintain your income in retirement and ensure you’re getting the most for your money!
It might take a little time and effort, but with a solid strategy and help from advisors, saving for and planning your retirement isn’t as daunting as you might think. We’re here to help email us at firstname.lastname@example.org.