Retirement Savings Tips For 55- To 64-Year-Olds

Saving for retirement is a function that is often put on hold by those who feel they have sufficient time to start planning and saving later. While it is never too soon to start saving for retirement for any age group, those who fall within the age range of 55-64 are more acutely aware of its importance, as retirement is imminent. As such, age 55 to 64 is a critical period to get a realistic assessment of how financially prepared you are for retirement. (Not in this age bracket? See Savings Plans For Minors, Retirement Savings Tips For 18- To 24-Year-Olds, 25- To 34-Year-Olds, 35- To 44-Year-Olds, 45- To 54-Year-Olds and 65-Year-Olds And Over.)

Assess Whether You're Financially Ready for Retirement
Assessing your financial readiness will help you to determine whether you have a projected shortfall and whether you need to modify your retirement strategies, goals and objectives. To do so, you will need to gather a few things, which include the balances of all of your accounts, your income tax rate, the average rate of return on your savings and information about your current income, as well as the amount of income you project you will need during your retirement period. (To find out how much you'll need to retire, see Determining Your Post-Work Income and Retirement Planning Basics.)

If you participate in a defined-benefit plan, your plan administrator or employer should be able to provide you with your projected income from your pension. (To learn more see, Introduction To Social Security, The Demise Of The Defined-Benefit Plan and the Social Security Benefit Calculator.)

Let's look at an example of an individual with the following financial profile:

Source: Denise Appleby, Appleby Consulting Inc.

Figure 1

A financial projection using this data produces the following results:

Source: Denise Appleby, Appleby Consulting Inc.

Figure 2: Calculator used for this illustration available in the members' area at http://www.applebyconsultinginc.com/.

What you can determine from these results:

Estimated need at retirement is: $1,875,377
Projected assets at retirement are: $1,002,931
Projected shortfall is: $872,446
Additional monthly taxable investment needed to meet goal: $3,086
Total monthly taxable investment needed to meet goal: $3,286