This is a guest post from Crystal of Budgeting in the Fun Stuff: A Personal Financial Blog about the Next Financial Step. It’s an open fiscal diary and a personal finance blog rolled into one.
According to this Yahoo! Finance article, $1 million is no longer the target retirement amount.
Scottrade polled 226 investment advisers and this is what they thought each age group should shoot for:
Ages 18-26 (Generation Y) – 77% of advisers responded that they should shoot for at least $2 million, 40% thought $3 million sounded better
Ages 27-42 (Generation X) – 46% thought $2 million, 22% suggested more than $3 million
Ages 43-64 (Baby-Boomers) – 35% suggested $2 – $3 million, 30% recommended $1.5 – $2 million
Ages 65 and above (Seniors) – 44% thought that $500,000 – $1 million would be enough
Let’s just say, I am not surprised that $1 million wouldn’t be enough for my generation. I was surprised that these adviser recommendations were so close to what we had already decided based on retirement calculators and our own personal conclusions.
According to these results, my husband and I should be shooting for about $2 million, which is exactly what we had already decided in addition to my husband’s pension. We figure that we will be able to live better than we do now off of 3% of those accounts plus 70% of my husband’s normal earnings, which is what the pension will supposedly provide. We are currently on the right track, but who knows what our investments will actually produce?
Well, no one can know for sure, but we use online calculators to help us determine what our future amounts might be (like this Roth IRA calculator or this 401k calculator). We calculate using an 8% rate of return on the Roth IRA and 401k since they are heavily invested in high-equity mutual funds. We then calculate using a very conservative 5% rate of return for our Scottrade account since this will be used to bridge the gap between our actual retirement dates and age 60 – rather have too much than too little, right?
Did this article catch you by surprise? What were your retirement goals? Are you on track for the amount these advisers suggest?