How to Know if You’re on Track for Retirement

Track for RetirementDo you know if you are on track for retirement? If you don’t know, the answer is probably “no.” Saving for retirement is one of those “should do’s” that many people put off until sometime in the future. But the longer you wait to start saving, the more you have to save every year – and the higher the likelihood that you’ll be unable to retire at 65.

According to human resource consulting and outsourcing firm Aon Hewitt’s Real Deal 2012 Retirement Income Adequacy at Large Companies study, workers who have 11 times pay set aside when combined with Social Security will be able to replace in year one of retirement 85 percent of their pre-retirement income. The 85 percent rule of thumb reflects one’s final salary, adjusted for decreased savings and taxes, increasing medical costs and changing expenditures in general, as well as inflation. Keep in mind that the study does not reflect savings or other retirement assets outside of employer-sponsored plans.

However, with today’s economic pressures, retirement expert Bill Connelly says a new survey shows that more Americans are sacrificing their retirement savings to help family members. One in five people spend an average of $240 per month to cover expenses for their parents; meanwhile, approximately one in three are putting a roof over the head of at least one child 25 or older.

While there are a number obstacles keeping many from saving for retirement, there is still time, no matter what your age. With a number of saving strategies available, what it comes down to is figuring out how much would you eventually like in your retirement account, and how much time you have to get it. To help you get a sense and understanding of where you are on the track for retirement, check out an online retirement income planner calculator. Though a great place to start, calculators can’t predict the future and should be used to give you a sense of where you are and what you need to get where you want to be.

Also important for retirement preparedness is building an emergency fund, never carrying a credit card balance and having a plan to systematically pay down all debts. These factors are said to have a high correlation with being on track for retirement. If you’re doing them you’re on your way. If not, you should seriously consider this as part of the overall plan.

What can you do to get you on track for retirement? First, start saving more. Second, seek out professional advice. People who prepare for retirement with an independent financial advisor are much better situated to think about their longevity, healthcare needs and their financial needs in retirement. Third, consider retiring later. And fourth, consider carefully how you plan to draw down your assets in retirement. Aon Hewitt reports that a “retiree self-managing the distribution of their retirement assets will likely need to plan for a period longer than the average life expectancy or they will face a 50 percent risk of running out of money.”

Money and all that comes with it – debt repayment, saving, retirement, etc. – can be overwhelming for anyone. Seeking out a trusted financial advisor who can help you make a plan is one of the most cost-effective – and smartest – decisions anyone can make.

For more information on Summit Brokerage Services,  an independent broker-dealer, visit or contact us at (800) 354-5528.

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