By STEVE BAILEY
Many people realize the importance of saving for retirement, but knowing how much they need to save is another issue.
You can go online and find a website that has a retirement calculator that you can enter your personal information. It will then give you an amount that you should be saving each year to reach your goal, or you can use the general rule of thumb that you will need approximately 80 percent of your pre-retirement income.
However depending on your own situation and the type of retirement you hope to have, the number that you come up with may be higher or lower than what you actually need.
You may also come up with a number that is impossible for you to save based on your current income and expenses. So how can you determine how much money you need to save?
There are several factors that you will need to look at to help you determine how much you need to save for retirement. The first factor that you need to consider is the age at which you expect to retire. Everyone hopes that they will be able to retire as early as possible but the earlier you retire the more money you will need for retirement.
So when you pick an age for retirement be realistic on how much money you think you will need in retirement and how much money you will be able to save to meet this goal. If you can't save enough to meet your goal for retirement, you may need to move retirement age back.
A second factor that you will need to consider is your expected life span. With modern medicine people are living longer and longer. This could affect your retirement assets because you will have to make sure that you don't outlive your money.
You will also need to consider your current health and how long other members in your family have lived and adjust your life expectancy number accordingly.
Another factor that will affect your retirement will be the lifestyle that you choose in retirement. If you are planning on doing a lot of traveling, taking up expensive hobbies, or continuing to live the same lifestyle as you had before retirement, you will need to make sure that you have increased the amount that you need for retirement.
One of the biggest factors that you will need to consider is what you will do for health insurance if you decide to retire before you are eligible for Medicare at age 65.
In the past, most companies paid for their retiree's health insurance (or a large portion of it) until the retiree was eligible for Medicare at age 65, but today many companies have decided not to offer this benefit to their retirees.
This means that you may have to find your own health insurance until you reach age 65. This can be very expensive, especially if you have any health problems, and it may force you to spend the money that you planned on using for retirement to pay for your health insurance.
After considering all of the above factors, you should have a better idea of how to determine how much you may need to save for retirement. If you feel overwhelmed trying to figure out how much you should be saving for your retirement you may want to contact a financial planner to assist you.
Steven J. Bailey CFP, CLU, ChFC is a registered representative of American Portfolios Financial Services, Inc. Member FINRA/SIPC, Advisory Services offered through American Portfolios Advisors, Inc., located at 992 E. State St. Salem and can be reached at 330-337-7720 or www.baileyfinancialplanning.com if you should have any further questions regarding this matter.