Rural Water - Quarter 4, 2013 - (Page 16) YOUR CAREER IN RURAL WATER Retirement Readiness BY MICHAEL C. PERRY, CPC, AIF ARE YOU LOOKING forward to retirement? The quality of life you will enjoy in retirement depends on how much you save and how well you invest. How much money will you need in retirement? The general rule of thumb is that you want to accumulate enough to provide 70-80 percent of your income prior to retirement for the remainder of your life (and your spouse's). People are living longer, healthier lives. According to data compiled by the Social Security Administration, a person reaching age 65 today can reasonably expect to live until their mid 80s. One out of every four will live past 90 and one out of 10 will live past age 95. So the real answer to the question "How much money will you need in retirement?" to provide 70-80 percent of your pre-retirement income throughout retirement is, "a lot"! When you reach retirement, your income will come from primarily from three sources: 16 * Fourth Quarter 2013 * Social Security * Personal savings * Company retirement plans Failure to prepare may mean having to work longer than planned, living a lifestyle far below what you are accustomed to, or not being able to retire at all! Social Security was never intended to be an individual's primary source of income in retirement. When enacted in 1935, the average life expectancy was 61.7 years. Promising to pay a monthly benefit for life, at a retirement age of 65, seemed like a good bet for the federal government. How much should you be saving for retirement? A recent study by the Frank Russell Company indicates that the average person should save about 12 percent of their income each year. If you are not saving 12 percent of your income, try to increase the amount you save every year by just a little bit until you reach 12 percent (note: this amount includes any employer contributions to a retirement plan). How much should you have saved by certain points in your life? A recent study by Fidelity indicated the following benchmarks: * Age 35 - one times your annual salary * Age 45 - three times your annual salary * Age 55 - five times your annual salary * Retirement - eight times your annual salary How are you doing? The quality of life you will enjoy in retirement depends on how much you save and how well you invest. Investing makes some people's head hurt. They usually don't understand it. They usually don't want to understand it. Investing can be easy. Over 90 percent of an investor's longterm rate of return depends on how they allocate assets: between stocks/bonds/ cash, growth/value, big companies/little companies, US/international. The actual investments and timing in/out of the market aren't as important. I cannot stress the importance of building the proper asset allocation. The appropriate asset allocation is based on your time Table of Contents for the Digital Edition of Rural Water - Quarter 4, 2013 FROM THE PRESIDENT STANDING IN THE GAP RETIREMENT READINESS LOVING LOUISVILLE: THE 2013 H2O-XPO IS A HIT WATER/WASTEWATER INFRASTRUCTURE FINANCING GO PAPERLESS! 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