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Everyone wants to retire with plenty of money set aside to have an enjoyable life. Maybe you want plenty to travel, spend time at your southern and your northern homes each year, visit family, and see the world.
To live as well as you do now when you retire, you'll want to have at least 70 percent of your current salary saved away for each year of your later life. That's quite a bit, yes. But if you consider the rising cost of health care for older people, it's really fairly accurate. For example, if you're 65-years old and making $100,000 a year, you'll have to have $1 million dollars saved up in order to live a comfortable retirement. This is assuming that you'll live to be 92 years old, and that your money is invested at 7 percent. If you don't have that $1 million saved, you'll live on a much lower income than you're used to. Using the same formula, a 55-year-old who makes $50,000 a year will need to have about $600,000 saved in order to retire comfortably. And a 50-year old who is making about $70,000 will need to have about $1 million in their savings by the time he retires (this estimates considers inflation). The amount you need is nothing to sneeze at.
If you have some time before you retire (if you're in your 20s, 30s, or 40s) you have a fairly large risk tolerance. This is good, so you can invest more money in stocks and less in bonds. If you have a few years before you retire, but if it's creeping up, you'll want to have a more conservative portfolio and invest about half in stocks, half in bonds.
Most Americans who retire end up wishing that had started saving for retirement a lot sooner than they did. They think their Social Security and pension plans will help them out. This is true, but most of your income will come from your own pocket. It's better to start preparing for retirement now.