Monday, January 01, 2007

Retirement Savings - The Magic Number

Happy New Year!

Okay, so everyone in the pf blogging community is talking about New Year's Resolutions and Goals for 2007. I haven't put much thought into that particular topic yet because I have too many variables in play right now. If I get into graduate school, I'm going to quit my lucrative job and try to find a part time job. If I can't find a part time job that pays enough to cover my property taxes and monthly assessments, I'll need to sell my condo. If I sell my condo, I'll need to figure out where to live. And so on and so forth. You can see why it's a bit difficult for me to set any concrete financial goals for 2007.

So to ring in the new year, I thought I'd blog about retirement savings instead. When I first met with my financial planner in 2004, he told me that given my lifestyle and values, if I decided to quit saving for retirement altogether, I would still have enough money to retire comfortably at the age of 67. I couldn't tell if he was joking or just being overly optimistic. But a recent article in the Your Money section of the Chicago Tribune makes me think that perhaps he was right.

Where are you on the road to retirement and how much should you have saved by now? According to senior financial planner Christine Fahlund, here are some rough guidelines. If you're...
30 years away from retirement, 100% of your income
20 years away from retirement, 2 times your income
10 years away from retirement, 6 times your income

The article goes on to say that the above "goals are generally achievable if you've been socking away 15 percent of income steadily since your 20s or 30s….if you started late, you need to save a higher percentage of your paycheck.”

I'm guessing that by 'savings' they mean liquid assets vs. equity in your home. Either way, it looks as if I'm well ahead of the curve, which makes this whole career transition thing a bit more palatable, thank God.

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