Ramblings from Early Retirement

I keep reading that most Americans have way too little saved for their retirement. On Yahoo!Finance, the article Moving toward your retirement goal references a recent study by the Employee Benefit Research Institute (EBRI) and the Investment Company Institute (ICI).

The study also reveals that 401(k) balances grew along with the ages and job tenure of participants. The average account balances for boomers in their 40s and 50s were $91,848 and $127,766, respectively, last December. Folks in their 60s accumulated an average of about $141,000.

My savings are well above average, but know people who have little saved, so the numbers weren't that big of a surprise.

The article continues with estimates of how much you need to save to supplement Social Security and pension income (if you're lucky enough to have a pension). Numbers are given for $1,000 to $10,000 a month for 20 or 30 years and assume a 6 percent return and inflation of 2 percent per year. To withdraw $1,000 a month for 20 years, you need to save $232,358. You need to save $342,965 to withdraw $1,000 a month for living expenses for 30 years.

I really identify with Suze Orman's advice to "contribute to the max" in A Shot in the Arm for 401(k) Investors. Orman's article is one of many that have been written about The Pension Protection Act of 2006. I spent many years maxing out my 401(k) contributions and saving almost as much in after tax investments. It enabled me to retire at 49. For you, it may mean paying college bills and retiring comfortably at a later age. I'm one of the lucky ones with a pension and subsidized medical benefits from my former employer.

// posted by SusanBLuvsCrafts @ 7:58 PM